New Payments Platform Built to Benefit Everyone – Daria Rippingale, BillPro
We live in a world where we expect everything to happen instantly. What’s more, advances in mobile technology and mobile payments have set high expectations when it comes to the ease and convenience of making payments on the go.
Yet, payment platforms, by and large, have not kept up. Transfers between banks still take days and deposited checks can take a week before the funds are available. Real-time payment systems, like the New Payments Platform (NPP), aim to bridge this gap. In Australia, the NPP is rapidly moving through phases 3 and 4, the development and testing phases, and will be ready for adoption in 2017.
And the most exciting part – every party along the payment chain is a winner
The most obvious benefit of the NPP is the immediate availability of funds. Barriers to making large purchases, such as acquiring cashiers checks, become a thing of the past as funds can be instantaneously transferred from consumer to merchant.
For consumers and the general public, small everyday payments or person-to-person transfers become quick and easy. Owe a friend for picking up movie tickets? Transfer funds with your phone, and they will have the cash right away to pay for dinner before the show.
But the benefits go beyond quickly sending and receiving funds. The architecture of the NPP has opened the door to businesses outside of the banking industry to shape the future of payments, thanks to the fact that the NPP significantly extends the amount of information that can accompany a payment.
The extended messaging comes as part of the decision to use a standard messaging format known as ISO 20022. This global standard defines what these messages should look like when they are sent and received, allowing both sides to understand what’s in the message without adapting their systems to each incoming payment.
One of the benefits of this message format is that both consumers and businesses will have the ability to attach free text – notes, if you will – to the payment. Think of the memo section of your checks, but with digital payments that are also immediate.
This additional information also paves the way for what are being called “overlays” to the platform.
Overlays are like context appropriate add-ons, and the relationship is analogous to that of smartphones and mobile apps. The phone provides a platform and the underlying functionality. The apps extend and customize what you can do with your phone. It’s the same with the NPP and overlays.
And because the NPP has adopted the standard messaging format, the creators of these overlays won’t need to be banks. Since the message content types and length are standardized, everyone will be speaking the same language, so to speak, when messages are sent and received. Overlays won’t need banks to act as a middle man. As a result, expect to see a new fintech sub-industry dedicated to the creation of overlays for consumer and business usage.
The benefits of the NPP are as yet unrealized, but their potential is significant to consumers, merchants and businesses outside of the banking industry. The immediacy of real-time payments will improve cashflow, make person to person payments easy and instant, and will allow innovative fintech companies to create context relevant payment applications with overlays to the systems. With speed and convenience combined with flexibility and expandability, NPP stands to set payments up to match the expectations of a modern world.
Daria Rippingale, CEO of BillPro, is a global authority on processing, e-commerce innovation and international payment protocols. BillPro Pty Ltd, an industry leader in fraud-abatement and cross-border online payment solutions, offers an international network of acquiring banks, leading edge secure technology and multi-currency payment options.