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The future of the Australian payment system

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You may have started hearing people talk about The New Payments Platform or The NPP, which is set to go live in late 2017. Simply put, this new payment system will allow you to make fast and flexible everyday payments within roughly 15 seconds.

But how will the NPP make banking easier for you? Well, the most significant benefit will be the ability to enter a friend, family member or colleagues phone number or email address and instantly make a payment to them, regardless of whether you bank with different institutions. This means you can easily split a dinner bill at the table or pay a contractor whilst still on your property, it is simple and fast.

The NPP will streamline the payments process by removing the need to enter both a BSB and account number when transferring money between people or businesses. Instead you will have the option to nominate an identifier/alias, such as a mobile number, email address or ABN to send or receive money. The system will allow you to access money deposited into your account as soon as the payment is received, even if the payer banks with a different financial institution. The NPP is expected to settle payments in roughly 15 seconds, much faster than current platforms that take between one and three days.

As well as being fast, the NPP will be extremely secure. The NPP will verify payments in real time and allow you to transfer data-rich information with the payment. Additional information linked to payments is currently restricted to 18 characters of text. With the NPP, you will be able to enter up to 280 characters as well as link documents to each payment.

Whether you are buying a cup of coffee or a motor vehicle, it is guaranteed the funds will be transferred instantaneously, every day, all day, including weekends and public holidays. These are all fantastic steps in a progressive direction and confirm that the NPP will certainly meet the evolving digital needs of Australians today.

With only the one identifier needed for payments, the simplicity opens a world of possibilities to App developers who will no doubt find numerous ways to reduce time spent on labour-intensive processes, such as paying monthly bills. The first NPP transaction will then trigger "request to pay" notices which can simply be agreed to by consumers, without having to agree to direct debits.

Today's payment systems mean leaving your bank is a complicated process and often puts people off doing so, even if it means getting a better rate. Under the NPP, if you want to change banks, you will no longer have to notify all billers as the payments will be linked to an identifier that won't change. Customer inertia is a prevailing reason for big banks making such large returns and hopefully this new platform will bring about some well overdue change.

There is certainly a lot to look forward to in the payments arena and what used to be a fairly stagnant topic is certainly not the case anymore.

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