RBA Calls on Major Banks for Strengthened NPP Services

​The RBA (Reserve Bank of Australia) has written to the CEOs of some Australian banks seeking assurance that they will be ready to launch new payments systems that will make it easier and cheaper for customers to set up direct debits and transfer money internationally.

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In a speech on 3 May, RBA head of payments policy Ellis Connolly said several of the major banks have indicated that they will not be able to meet a July commitment to implement a new service known as PayTo, which is part of NPP (New Payments Platform) Australia's roadmap to deliver greater benefits to end users.

PayTo offers a new, digital way for merchants and businesses to initiate real-time payments from their customers' bank accounts using QR codes. It aims to provide a more seamless digital customer experience, offering greater visibility and control over payment arrangements and other benefits including real-time account validation, confirmation of funds availability and real-time confirmation when a payment has been made.

ANZ, NAB and Westpac were unable to hit the 30 June implementation timeline, as reported.

"We recognise the considerable effort and investment required to develop PayTo, and the challenge of delivering multiple key payment initiatives at the same time," Connolly said. "Nevertheless, these delays will significantly limit the availability of the service and the realisation of the benefits for end users."

He said the RBA governor [Philip Lowe] has written to the CEOs of some banks to seek assurance that they will be ready to launch PayTo by no later than April 2023, and that they will make the service available for their entire customer base.

The RBA also expects banks to "remain committed" to delivering a new international payments business service in 2023. Under the new service, the AUD leg inbound cross-border payments will be processed by the NPP, and allow for additional data about the sender to be transmitted, making it easier for banks to meet their financial crime compliance obligations. "This service will result in safer and faster cross-border payments," Connolly said.

The RBA is also calling on banks to improve the reliability of NPP services they provide, pointing to unplanned outages at up to three-quarters of payment service providers in H2 2021. The average accumulated unplanned downtime per NPP service provider was almost seven hours, which is much higher than the two-hour average at other 24/7 services such as card payment services.

In his speech, Connolly said the RBA has started work on a set of common access requirements to help support access to the NPP. This work is part of the government's payments system reforms, and seeks to reduce the reliance of payments businesses on Australia's big four banks.

The common access requirements will be incorporated into a new licensing framework for non-ADI (Authorised Deposit-Taking Institution) payment service providers, helping to reduce barriers to entry and support competition, innovation and fairness in the payments system. "We are engaging with payment system operators as part of this process," Connolly said.