On the eve of the second anniversary of its launch (13 February 2018), the New Payments Platform supports real-time payments between more than 66 million accounts and close to 90 organisations access the platform, including a growing number of fintechs.
NPP Australia (NPPA) recently responded to the Senate Select Committee on Financial Technology and Regulatory Technology. Available here, the submission explains key aspects of the platform’s access and functionality, some of which are outlined below.
- NPPA’s recently published roadmap outlines the native capability that will be delivered over the next two years to support a range of use cases. This includes payment initiation capability – the functionality most frequently asked for by fintechs and the market (and often referred to as ‘write’ access under Open Banking)
- NPPA’s mandatory compliance framework introduced in 2019 will drive implementation of key future functionality and its timing
- The NPP’s access framework has been designed to encourage broad participation while maintaining safeguards to ensure the safety and security of a real-time payments system, strong consumer protections, and to minimise fraud risks.
- Australia has a different regulatory landscape to other markets that are sometimes used as comparison. In the United Kingdom, a supervised regulatory framework for Payment System Providers (PSPs) and Electronic Money Institutions (EMIs) enables some organisations to connect directly to the UK Faster Payments Service (under a pre-funded settlement model). While these organisations may not be regulated as intensively as banks, it does not mean they are not regulated. They are subject to authorisation, capital requirements, conduct and ongoing prudential supervision by the UK Financial Conduct Authority as a class of regulated entity that does not have a close equivalent in Australia.
- A growing number of organisations, including wholesale payment service providers (aggregators) and non-bank fintechs offer NPP connectivity. Over time, we expect competition in this market will increase as the ecosystem matures.
- NPP connectivity is increasingly offered to third parties via APIs. Greater availability of APIs will help provide more fintechs, corporates and businesses with the ability to access and use the NPP.
- A Governance Committee made up of NPPA’s independent directors makes decisions regarding access, transaction pricing and compliance.
- Although supplying about 80% of the capital to build the NPP, the Board of NPPA is not controlled by the four major banks, whose appointed directors have only four votes from 11 voting directors. The Board includes two independent directors and a representative from the Reserve Bank of Australia. A third independent director will join the Board in February 2020.
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