Australians have rapidly embraced new money transfer system, says Reserve Bank

Australians have embraced a new instant money transfer system even faster than the Swedish or British, says the Reserve Bank.

A new PayID used to transfer money via the New Payments Platform. Picture: Supplied.

Despite minimal advertising and banks’ slowness to introduce the service, Australians have embraced a new instant money transfer system even faster than the Swedish or British did theirs, according to new analysis by the Reserve Bank.

Launched in February after almost six years of consultation, more than 2 million Australians have started to use the New Payments Platform, which processed transactions worth $8bn a month in September, or more than double the level in May.

Use of fast payments system

“It appears the adoption of the NPP is proceeding at least as quickly as occurred for some other fast-payment systems,” said Tony Richards, head of payments at the Reserve Bank.

The service, which allows real-time money transfers direct to bank accounts using individual PayIDs that are typically linked to mobile phone number of email address (rather than BSB and account numbers), also allows customers to include messages of up to 280 characters with their payment rather than the 18 that has been standard.

Speaking overnight in Chicago, Dr Richards said the number of payments processed through the payments platform already exceeded the monthly of cheques being written.

“As long as the rollout of NPP to households has not been complete, advertising of Osko by BPAY has been limited, but it would expect that this will be picking up, and that financial institution will also be doing more promotion of real-time payments to their customers,”

“The system of large banks are inevitably extremely complex, and upgrading them to allow real-time posting and 24/7 operation has taken longer than expected for some,” Dr Richards said.

“This involved around 50 institutions initially, with this number now having increased to around 65 institutions,” he said. HSBC and AMP bank still don’t offer the service. Only two of the four major banks have fully integrated the NPP into their customer apps.

In its analysis of competition in financial system, the Productivity Commission urged regulators to ensure the NPP was open to new entrants or risk becoming “yet another payment system subject to the market power of incumbents”

“The NPP is a significant piece of national infrastructure and more transparency and rigour around the process for access is needed to avoid conflicts of interest that would potentially restrict competition” The Commission said.

Currently, only licenced banks are able to connect to the NPP and offer services, and any new firms need to pay a $2 million joining fee.

“A recent survey of Australian fintechs indicated that over 80% were unconvinced about the ease of access to the NPP” the Commission said.