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What is the NPP and what’s in it for me?

16 April 2018

Two men signing papers

Money & Life team

Money & Life contributors draw on their diverse range of experience to present you with insights and guidance that will help you manage your financial wellbeing, achieve your lifestyle goals and plan for your financial future.

Could cash become a thing of the past with the introduction of the New Payments Platform (NPP) to Australia? Learn about this new technology for faster financial transactions and how you could be using it in 2018 and beyond.

What’s all the fuss about?

Perhaps you heard about the public launch of the NPP in February 2018 or maybe it didn’t make it onto your radar. In fact, if you don’t work for a bank or financial institutional, the NPP isn’t likely to be a brand you will be hearing very much about. But it will be changing the way you make payments to businesses and individuals in the near future. So here’s a quick rundown on what it is and the changes you can expect to your banking services.

Why is the NPP being introduced?

Back in June 2012, the Payments System Board of the Reserve Bank of Australia (RBA) made a number of recommendations for overhauling our standard electronic payments system[1]. As a result, the RBA have been working with 12 other financial institutions — including the big four banks — to develop the NPP technology and infrastructure[2].

How is it different from EFT payments?

The NPP was designed to offer businesses and consumers a faster payments system that’s easier to use. So compared with EFT payments that can take 1-2 business days to process, with the NPP you can expect instant payments between accounts with any participating financial institution. Payments can be made around the clock and the money will be available in the destination account within seconds.

With the arrival of NPP technology, you’ll also be able to include more remittance information with each transaction[3]. Remember how you’re limited to a certain number and type of characters when you use a reference to make an EFT payment? The new system allows you to include more detailed information to describe or identify transactions.

How will I be using the NPP?

According to media releases from both the NPP and the Reserve Bank, 60 financial institutions around Australia are taking the opportunity to make NPP technology part of their service to individuals and businesses. How you’ll experience this as a customer depends on the way your bank, building society or credit union integrates the NPP with their current mobile and internet banking service. There are currently two options available – Osko and PayID.

PayID is basically how all consumers will experience payments using the new NPP. It simplifies the information you need to give to send or receive a payment as well as offering the other main NPP benefit – instant transactions. No need to look up your BSB and account number when you want to get paid. You can set up your own PayID identifier that’s easy to remember and then give that to the person who is transferring money into your account.

Osko is a proprietary system BPay have developed for financial institutions to offer PayID to customers [4]. Whether you’re using PayID or Osko, you’ll be experiencing the same payment service with the same features and benefits. In the future it’s quite possible that other systems, brands and products using NPP technology and PayID functionality will become available.

Is the NPP secure?

According to FAQs on the NPP website, “the New Payments Platform has been built with security and fraud front of mind.” And you’ll have to log in to your mobile or internet banking service to access your PayID service so you can expect these transactions to be as secure as electronic payments you’re making now. However, you’ll need to keep your PayID information private and secure, just as you would with other personal financial details. Beware of scams and hoax emails you might receive asking you for your details or requesting that you follow a link to login. The NPP offer some handy advice on how to avoid these types of scams.

Will NPP payments cost me more?

Any charges for PayID transactions will be determined by your bank or financial institution[5]. Make sure you check what their terms are before you begin making payments.

[1] Reserve Bank of Australia, Media Release, 13 February 2018, “The launch of the NPP means that the industry is delivering on the key strategic objectives that were established by the PSB in June 2012 as part of its Strategic Review of Innovation in the Payments System.”

[2] NPPA Media Release, 13 February 2018, “today’s launch of the New Payments Platform is the result of unprecedented collaboration between 13 members of Australia’s financial services industry, including Australia’s four major banks and the Reserve Bank of Australia”

[3] Reserve Bank of Australia, Media Release, 13 February 2018, “have the capacity to send more complete remittance information with payments.”

[4] PayID, “Some financial institutions use the Osko system to facilitate PayID.”

[5] NPPA, “Pricing for transactions made via products and services on the New Payments Platform is set by the bank, building society or credit union offering the product or service you intend to use. Speak to your participating financial institution to find out more.”