Talk of PayID, PayTo and NPP (New Payments Platform) has been around the financial industry for quite some time now. What is it all about and how does Credfin fit in?
What is the NPP?
The New Payments Platform is a platform with the ability to initiate fast payments through open-access infrastructure. Developed in early February 2018, this industry-wide platform, “provides a fast, flexible and data-rich payments system that enables Australian consumers, businesses and government agencies to make real-time account to account payments.” (NPPA, 2020)
What does it mean for Credfin?
Integrating the NPP into Credfin services will involve three NPP solutions: PayTo, PayID and Real Time Direct Credit.
PayTo aims to bring real-time direct debits to consumers with the press of a button. This solution will be revolutionary for businesses such as credit providers, as they can initiate a direct debit in real time, cutting out the 1 to 2 days wait for payment clearance. Access to instant funds to relend instead of being tied up for up to 2 days will be a game changer. This will also assist the customer, as the credit provider is able to contact the customer immediately if a payment declines.
The systems and processes of PayTo are outlined in NPP’s April 2021 Updated roadmap:
PayTo builds upon the existing NPP infrastructure and leverages existing features and protections operating within the NPP today, specifically use of PayID, fraud prevention, liability allocation and risk management processes. With a comprehensive rules framework, liability model and robust governance already in place, PayTo supports third party payment initiation in a safe and secure manner requiring only one access point, and a range of either indirect or direct access options, including streamlined options for organisations with CDR accreditation.(NPPA, 2021) https://nppa.com.au/wp-content/uploads/2021/04/NPP-Roadmap-April-2021-Update.pdf
PayTo will provide increased visibility and control to a customer regarding their payment arrangements. This solution acts not only as an alternative to direct debit, but also supports the linking of bank accounts for in-app payments, card-on-file type arrangements, funding for other payment options such as digital wallets and BNPL services and for recurring e-commerce payments. Credfin will be developing a solution to allow easy online checkouts using PayTo.
PayID has been involved in the fintech ecosystem ever since the inception of the NPP. With over 6.7 million PayID’s registered it’s safe to say real-time payments have not gone unnoticed. Of these users, at least 45% of them use the service to send or receive payments. The simplicity and cost-effectiveness of PayID has been integral in its rollout. The Covid-19 pandemic and its need for contactless payments has also boosted the use.
Credfin can use the PayID solution for automated invoice reconciliation on behalf of our client. PayID is not only instant, but is simple to use as it allows us to send funds to a bank account using an email rather than a BSB/Account number. Traditionally, EFT payments from BSB/Acc number were identified through reference alone. PayID offers a more accurate solution when identifying which customer has made a payment. No reference needed; no room for human error.
With NPP’s Real-Time Direct Credit solution, Credfin can facilitate the transferring of funds between our clients and their customers. This service works for both BSB/Account Number and PayID. Lenders with funds within Credfin can issue payment instructions to transfer money into their customer’s accounts. This process is instantaneous, as opposed to Direct Credit, which typically takes overnight to process and deliver. This is the same technology that Osko uses to deliver funds through PayID in near real-time, but on a larger scale. It allows a business to programmatically carry out the process rather than manually keying in transfer data into their business banking account.
Credfin will be working on all of these solutions in the background to provide an offering to our clients.
The team at Credfin are excited to implement these solutions into our ecosystem, not only as they have been developed with state of the art innovation, but also because they uphold the vision of Credfin so well: for all digital lending to be real time.
Some handy resources:
RBA’s NPP Functionality and Access Consultation: Conclusions Paper: https://www.rba.gov.au/payments-and-infrastructure/new-payments-platform/functionality-and-access-report/the-development-and-initial-operations-of-the-npp.html
NPP Roadmap April 2021 Update:
New Payments Platform Roadmap October 2020: