New Payments Platform (NPP) – what are the benefits?
The New Payments Platform (NPP) is a world-class payments infrastructure transforming the way Australians transact. Now officially launched to the public, the NPP provides real-time funds transfers and a host of other benefits to consumers, businesses and government departments.
If you’re not quite up to speed on the NPP, the benefits it has and how it can benefit you or your business – you’re not alone. Here’s an overview to bring you up to speed:
What is the NPP?
The NPP is a completely new payments infrastructure for the Australian economy, which launched on Tuesday 13 February 2018. An initiative of the banking industry, it provides fast, flexible and data-rich payments to individuals and organisations. The platform was developed by NPP Australia Ltd and 13 financial institutions.
What does the NPP allow me to do?
Under the NPP, households, businesses and government agencies can send and receive faster, data-rich payments.
This means you can send near-instant money transfers from one bank account to another, with real-time clearing and settlement available 24/7. No longer will you have to wait for funds that have been transferred to you to clear and be available in your account, ready to use.
The “data rich” bit means you can attach longer descriptions to your payments. Instead of using all sorts of acronyms and abbreviations to squeeze a long description into the available character limit, you can clearly detail what a payment is for.
How does it benefit consumers?
In our 24/7 digital economy, we expect things to happen fast. So when we transfer money to someone else, we want it to happen straight away.
The NPP makes this a reality for Australian consumers, providing convenience and freedom for a wide range of personal transactions. When a friend promises to transfer funds to your account to cover their share of a restaurant bill, that money will appear in your account and be ready for use almost instantaneously. If you want to send money to a relative interstate to help them pay an urgent bill, you can get them the funds they need straight away.
It’ll also be much easier to send payments. Instead of exchanging hard-to-remember BSBs and account numbers, you can identify a transaction account by a simpler payment address, such as the account holder’s email address or phone number.
BPay's Osko platform is a great example of how the NPP could benefit you. The service allows you to pay bills in real-time, send a 280-character description with each transfer and identify payees by their email address or phone number (known as their PayID).
How does it benefit businesses?
Businesses can will enjoy a number of important benefits with the NPP. For starters, you can pay your contractors and suppliers quicker, which will help you get things done faster. This not only means increased efficiency, but allows you to manage your cash flow more effectively.
The NPP simplifies complex payments, allowing you to quickly and easily transfer funds to many bank accounts. Instead of relying on BSBs and account numbers to identify transaction accounts, you can use an ABN, email address or phone number to identify an account. This is known as your PayID. You can even include more information than you previously could under the current character limit, with the ability to add more text or even link to external documents or add emoticons.
The NPP also allows the addition of overlay services, which can tap into the NPP infrastructure to deliver a wide range of benefits in much the same way that third-party apps can take advantage of the capabilities of your smartphone.
Some of the potential overlays could be simpler invoice payments, faster payroll payments, superannuation and straight through BAS payments. That is where business will really start to get the benefit.
The NPP is a separate platform to the current system, and the current payments infrastructure will still be active. This means that if you’re interested in the NPP you will need to speak to your bank to opt-in.
Want to find out more?
More information about the NPP, participating institutions and FAQ’s can be found on the NPPA website.
Whether or not you use the NPP there are ways you can efficiently manage your business cashflow. For assistance forecasting, improving and managing your cashflow better please contact your usual Hanrick Curran advisor or alternatively Matthew Beasley or Nathanael Lee on 07 3218 3900.
Thanks to Mozo and MYOB Pulse for your content contribution.
Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.