Several of Australia’s major banks have stalled the forthcoming launch of the New Payment Platform’s (NPP’s) PayTo capability, with the Reserve Bank of Australia’s (RBA’s) head of payments policy, Ellis Connolly noting the delay will “significantly limit the availability of the service”.

Speaking at the New Payments Platform Australia’s (NPPA’s) Real Time Payments Summit 21/22 on Tuesday, Connolly said the RBA has sought assurances from the relevant banks – which are unnamed – that they will be ready to launch PayTo by no later than April 2023.

This could see a nine-month delay to the anticipated launch date, which was originally slated for July this year.

Connolly warned that the postponement will “significantly limit the availability of the service and the realisation of the benefits for end users”.

Provided through the NPP’s fast payments rails, PayTo enables merchants and businesses – with the authorisation of customers – to initiate NPP payments from customers’ accounts.

Connolly said PayTo will effectively “pave the way” for direct debit payments to move to the NPP.

The service is also set to give payment-initiating merchants and businesses real-time account validation, fund verification, and notifications at various stages of payment.

At the customer end, Connolly said, “it will modernise the existing ‘direct debit’ system by giving customers more control, providing a “payment initiation functionality that was envisaged under the Consumer Data Right (CDR)”.

“It will also open up new opportunities for innovation and has the potential to provide significant benefits for end-users.”

He also urged banks to avoid a piecemeal rollout of PayTo, “making the service available for their entire customer base”.

Innovations in PayTo

Connolly flagged the possibility of introducing fast-payment rail innovations that have been deployed in overseas markets. For instance, enabling customers to make mobile-based payments to merchants directly from their bank accounts via a QR code scan – a feature available on Singapore’s fast payments service.

He said the NPP could leverage AP+’s new industry-wide standard for QR code based real-time payments to enable a similar capability through PayTo.

“Customers could also authorise merchants to debit their accounts for one-off payments or provide standing authorisations for recurring purchases,” Connolly said.

“This functionality could enable the NPP to compete more directly with card payments in future, providing consumers with more payment options and placing competitive pressure on payment costs.”

Connolly also addressed the move to enable in-bound, cross-border payments to be processed, at the Australian leg, via the NPP – a key priority under the NPP roadmap.

He said the RBA expects the industry to remain committed to delivering this capability in 2023.

NPP reliability concerns

Unplanned outages continue to challenge the NPP network, with around three-quarters of payment service providers reporting unplanned outages in the second half of 2021 that affected their NPP services. Many payment services providers had experienced multiple outages, according to Connolly.

The average accumulated unplanned downtime per NPP service provider was almost seven hours, he said – a figure “considerably higher than other 24/7 payment services”.

Moreover, a substantial amount of the NPP provider outage time occurred during the day (between 8 am and 6 pm), when customer service demand is at its highest.

Connolly called on industry participants to improve the reliability and uptime of NPP services, noting that the RBA’s Payments System Board will closely monitor NPP provider reliability.

The payments policy chief also urged NPP adoptees to do more to promote the use of PayIDs among their customers – which obviate the need for customers to use account numbers and BSBs in money transfers.

While there are around 10 million registered PayIDs in Australia, the RBA notes just “16 per cent of Osko payments are addressed using a PayID”.

According to the RBA, despite a few niggling bumps, the NPP has “largely met” the strategic objectives set by the Reserve Bank in 2012, with 107 financial institutions offering NPP payment services for almost 90 million customer accounts.

“Over the past year, the NPP processed more than a billion transactions, worth more than $1 trillion,” Connolly said.

“The share of account-to-account credit transfers that are made via the NPP has risen to around 30 per cent, including most ‘pay anyone’ transfers made through online banking.

“The rate of adoption of the NPP also compares favourably with other jurisdictions that have launched fast payment systems.”