By John Kavanagh
Superannuation fund trustees, investment managers, securities dealers and registry services have been put on notice that the New Payments Platform, which goes live later this year, has the potential for far-reaching impact on their businesses.
The NPP was launched in 2013 by a consortium of financial institutions, with the aim of developing national infrastructure that would allow for data-rich, real-time payments.
The project has been undertaken at the insistence of the Reserve Bank, which said Australia’s payment system was falling behind advanced systems overseas. A common view is that it is about improving retail banking services.
However, Franck de Praetere, the NPP program manager at SWIFT, the global financial messaging co-operative that won the contract to build and operate the system, says NPP will be about much more than retail banking transfers.
Under the new scheme, payment functions will operate outside banking hours and transfers will take only a few seconds.
Payments will include a lot more remittance information than is currently permitted: The space for remittance information will increase from 18 to 280 characters and there will also be a facility for documents to be linked to payments. This will allow for full alignment of payments and supporting data.
The system will allow for payments to non-bank account destinations. So-called “alias names” will include mobile phone numbers and email addresses initially, and should eventually include addresses on social media accounts and Australian Business Numbers.
The NPP is building the core infrastructure, leaving the development of service overlays to the market.
Praetere says there are lots of possibilities. “The Australian Securities Exchange’s CHESS system is getting a refresh, with the prospect of intra-day settlement. That could be achieved via an NPP overlay. There could also be competing settlement services.”
“Share registries will be able to make dividends payments in real time with the distribution statements attached.”
He says such facilities will improve reconciliation and exception management.
“In the superannuation system we have seen increased efficiency with the development of Superstream. But there are still some inefficiencies, such as the separation of data from the payment itself.
“NPP is going to create some competitive opportunities but it is also going to put pressure on industry participants. They will have to assess whether their systems are able to cope with real-time flows and whether they have liquidity management that is adequate to handle those flows.
“They might also find they have to respond to changing customer expectations,” Praetere says.