Australia's New Payment PlatformAn overview, a summary and some thoughts
A recommended starting point for finding out about Australia’s New Payments Platform (NPP). Mark Hume-Cook successfully deals with the thinking behind NPP, where NPP fits in the current 5 clearing mechanisms and the Reserve Bank of Australia, what is the New Payments Platform and why do we need it? and some good thoughts on Innovation in Payments.
The driver for NPP is essentially the concept of “DIGITAL DISRUPTION THROUGH INNOVATION”. Now digital disruption is a suitcase word – we recognise the suitcase, except we have different pictures of what is inside. For me, it is the change from the analogue telephone to the digital mobile device. The cell phone / mobile started life as a phone, the primary function of which was to have a phone with you all the time, to being an integral part of the social fabric (Facebook, Twitter) and everyday functioning (Banking, tickets, information). In simple terms how my friend’s teenager uses her “mobile” is substantially different to my 20-something daughter, different to me, and different to my octogenarian father.
The problem with the current payment systems is that they mimic a paper system – the writing of a cheque. Just as the early cell phone mimicked the phone. Today we are as far away from that paper system as the current motor car is from a horse-less carriage. (Early car designs mimicked horse drawn carriages). Innovation in Payment Systems will come from thinking outside of that cheque writing AND having an infrastructure to enable that innovation. Australia’s NPP is that infrastructure.
Of course figuring out what is needed in the future is a bit of guess work. The Reserve Bank of Australia’s educated assessment on current limitations highlights the following: –
• Time taken for the electronic transmission of money. We need hours not days and the current clearing systems cannot support that (keep in mind it is based on clearing a cheque)
• Demand for RICHER INFORMATION – the current 30 characters been insufficient.
• The dependency on using our Bank account number. The problem – who remembers the bank account information? Think about it: – a cheque or cash does not need a bank account number.
My salient points of Mark Hume-Cook’s white paper.
NPP Australia Limited is a registered Australian Public Company that is essentially a joint venture of 12 Australian institutions.
The network is SWIFT ISO 20022 provided by SWIFT – pronounced in a variety of ways. My American contacts pronounce it Twenty, Oh, Double Two or Twenty, Oh, Two, Two. The addressing services are provided by Fiserv. A Fast Settlement Service will be delivered by the Reserve Bank of Australia.
Two layers – the Basic Information (BI) layer and Overlay Services. The latter is the space for innovation and differentiation. The BI is the core infrastructure to deliver the initial “Convenience Service” to “Further enabling straight-through payments processing with rich payment information”
In my mind, the statement “promoting competition in the market for payment services, consistent with the overall stability of the financial system” is the mandate for the New Payment Platform. As such it forms the basic criteria for the definition of quality that must be built into your product AND TESTED for.
The immediate and obvious implication of faster payment. (I love the phrase – transfer of ownership of money). Electronic transfer will now truly compete with cash and card. Especially if it is done at a lower cost than Card.
Richer payment information is a place to put unstructured information. The use of which will emerge over time.
Banks will continue to be the middle-man providing the basic concept of holding funds in an account for the “foreseeable future”.
The importance of dispute resolution. When (not if) things go wrong, how easy will it be to resolve. This goes to trust and change in consumer behaviour. If the consumer (that’s me) does not trust the system, then it will not be used.
Page 19 through to 24 provide good thoughts on consumer needs and changes in behaviour. It also provides a good definition of the quality that should be built into the product. Simply put for the feature team – pull your quality specifications from these pages.