The price tag for Australian banks to bring the country’s New Payments Platform (NPP) into operational service this year is estimated to be $785 million (A$ 1 billion).
NPP is an instant payments system for Australian consumers, meeting their needs for new digital-age ways of paying for goods and services. Instant payment systems are becoming increasingly prevalent worldwide, as central banks and other national bodies react to the drastic increase in electronic payment volume that has taken place over the past decade. For those banks that have invested in this upgrade project the focus now will inevitably turn to return on investment, according to GlobalData, a leading data and analytics company.
The company’s latest report, ‘Instant Payments: A Global View’, provides an in-depth review of instant payment systems, and the extent to which they are being rolled out around the world in an effort to upgrade the banking sector’s payments offer for their customers. Australia is poised to launch its own version soon which will deliver a payments experience for their consumers in line with other sectors like e-commerce and retail.
Arnie Cho, a senior analyst at GlobalData explains: “This is a major move for participants in the payments market in Australia. The new infrastructure will improve the efficiency of the country’s payments system, drive innovation in the payments market and improve the user experience for consumers, businesses and the public sector.”
In the short term NPP is likely to drive significant growth in online credit transfers, P2P payments and reoccurring payments/direct debits. However over the medium to long term this will lead to a further decline in the use of cash, cheques and payment cards as methods of payment.
Cho, continued, “Australia’s NPP will facilitate fast growth in mobile based payments creating the environment for a gradual removal of payment cards. This process might take a decade or more but such change seems inevitable. The future of payments in Australia, and across the globe, is likely to be in mobile payments linked to current accounts.”
Not all banks will benefit from the new system in the same way. The most innovative banks are likely to benefit most from NPP through launching new products and services. However revenues will be restricted as banks will only be able to charge their commercial clients for the new payment services as consumers will expect to receive these services free of charge.
Information based on GlobalData’s report: Instant Payments: A Global View