RTP hits critical mass: RBA

Use of new payments technology in Australia - previously a pain point for the country’s central bank - has finally reached the “critical mass” of users it needs to take hold, according to Ellis Connolly, Head of Payments Policy at the Reserve Bank of Australia (RBA).

Speaking as a guest on an ANZ customer webinar, Ellis said the “slow and inconsistent” rollout of the payment capabilities available through the NPP had been a “frustration” for the RBA - but that was now “largely behind us”.

“The infrastructure is now up and running, and a critical mass of customer accounts have been connected [and] have access to these new services,” he said.

“We strongly encourage payment service providers… to roll out and promote these new services to business customers, so we can all start to reap the benefits.”

Achieving widespread adoption of the NPP is an important step for the financial services industry ahead of the decommissioning of the existing Bulk Electronic Clearing System (BECS) which industry is targeting for 2030, Ellis said. While it can feel like a long time away, he said, it was important the entire sector understands what the shift entails.

“It's critical that end users are effectively engaged on the journey towards decommissioning BECS,” Ellis told the call.

“We would encourage [businesses] to actively discuss the BECSs migration with your payment service providers, so that your current and future payment needs are taken into consideration.”

Real time

Ellis spoke on the call with Lisa Vasic, Managing Director, Transaction Banking, and Nigel Dobson, Banking Services Portfolio Lead at ANZ.

Vasic said Australia’s transition was part of a global movement, with markets investing in new technologies to ensure “they have the digital infrastructure to be able to support their economies in what is a ‘real-time’ world that we live in today”.

ANZ has already taken key steps to support customers keen to embrace the new payments landscape.

In December, ANZ became the first major bank to go live with PayTo service for billers, executing a successful transaction with the Australian Bond Exchange.

In July,  ANZ became the first major Australian bank to complete a cross-border payment into Australia in near real-time, through the use of the NPP’s international payments service.

For ANZ, Vasic said the digital transition was fundamentally “all about customers” - and helping them get “real-time ready”.

She stressed that did not mean everything a business did in the payments space needed to be real time, but about providing options for businesses when they are ready to “operate in a real time way”.

“This is about choice,” Vasic said.

Dobson said it was important to avoid attempts to define real-time treasury narrowly.

“It’s not just about rapid movement of funds out of a company’s accounts,” he said. “Real-time treasury [includes] lower or even zero-reconciliation through services like PayTo, offering real-time data and analytics.”

These elements will be “critical ingredients for the future-use of artificial intelligence in treasury”, Dobson said – and he expects “significant use case opportunities” in this area to emerge soon.

Left behind

Ellis told the call the opportunities presented by real-time payments became clearer when compared to the limitations of the soon-to-be retired BECS.

“BECS really is 20th century technology,” he said. “It has limitations that date back to the days of magnetic tapes being run up and down [Sydney’s] Martin Place to exchange information between banks.

“It's slow. It can take hours, if not days, for payments to come through. It's got very poor messaging functionality… It makes it harder to screen for financial crimes, as well.”

Ellis admitted the transition to the modern NPP system came with “costs and complexities” businesses would need to plan for, but said the “substantial uplift in functionality that comes with moving to real-time payments” was worth the investment.

These are also balanced against “the many hidden costs of BECS,” he said, “such as having much more manual processes, particularly when payments get misdirected, to higher risk of mistaken payments and the higher risk of fraud”.

“These things have real, tangible costs which you might not see in a per transaction fee,” he said.

Shane White is Edior at ANZ  Institutional Insights