How the NPP and overlay payments are set to benefit Aussie businesses

The New Payments Platform (NPP) is set to transform payments in Australia by introducing real-time payments between all payers and payees, along with a host of other benefits. One of the advantages of the new system is the anticipated widespread use of overlay services, which POLi Payments effectively already offers via its online real-time debit payment system. CEO Jeffery McAlister explains the benefits.

The New Payments Platform (NPP) is set to transform Australia’s payment industry by making real-time payments a reality for consumers and businesses alike. The NPP is due to become operational in the second half of 2017, but work has been underway on the plan for a number of years.

In 2014, we caught up with Paul Lahiff, chairman of theNew Payments Platform Steering Committee, who outlined some of the main benefits of the NPP. Since that interview, payments industry co-operative SWIFT has been tasked with building the NPP infrastructure. SWIFT has stated that the NPP will provide “richer data, 24/7 banking, faster payment outcomes and the overlay services framework will provide new value to Australian consumers and businesses”.

One of the changes under the NPP will be the introduction of overlay services. This is a key change to the payment system, as it will allow businesses other than banks to participate in and improve the payment network. Given the innovation within the payments industry the benefits this could bring are immense.

Local payments provider POLi Payments effectively already offers an overlay service. POLi Payments is an online real-time debit payment system that provides consumers with another way to pay for high-value items like airfares if they want to avoid paying credit card surcharge fees.

We quizzed POLi Payments’ CEO Jeffery McAlister about how he thinks the NPP will impact Australian businesses and how POLi Payments is already offering its customers a number of benefits that will become more widespread under the NPP.

How will the NPP impact Australian businesses?

The NPP will impact business in three ways:

1. Payments will happen in almost real-time. This will provide benefits for businesses, including cash flow improvements and merchants being able to verify payments immediately. This will make bank transfer a viable payment option for e-commerce and even point-of-sale transactions.

2. Additional information will be able to be shared about a payment. For example, currently a business paying an invoice generally enters the invoice number as the reference. However, under the NPP, if the business was only paying part of the invoice, they would be able to enter each of the item numbers being paid, which would make reconciliation easier for the recipient. Businesses could also potentially enter details about why the remaining items were not paid.

3. The NPP should see the emergence of “overlay services”. In effect these applications plug in to the NPP system to provide additional services. All businesses will eventually be able to take advantage of these overlay services.

A good example of how overlay services could impact businesses is the example of purchasing a motor vehicle. Under the current system, the seller receives a bank cheque or internet transfer as payment and then waits for the purchaser to lodge the paperwork with the relevant authority – for example, VicRoads – to complete the transfer. Under the NPP and an overlay service, information about the transaction, such as registration number and sale date, could be sent with the payment and shared with the authority, enabling them to update their records in real time. This would mean less paperwork and uncertainty.

The NPP should offer businesses a number of benefits in the future – does POLi already offer any of these benefits to its customers?

Indeed we do. POLi leverages the existing Pay Anyone facilities offered by the banks, and we enhance this service with additional messaging and real-time confirmation. In effect, the NPP will introduce some of the benefits that we have been offering since 2007. POLi will still be the only method to initiate a payment from a merchant’s checkout and pay via internet banking.

How will the NPP impact POLi?

POLi is currently able to initiate a payment from a merchant checkout, provide instant confirmation and send electronic updates to back-end systems. All of these services will remain under the NPP. However, with the NPP, POLi will be able to broaden its services through overlay services.

POLi is an online real-time debit payment system – what benefits does this offer business and consumers alike?

POLi allows consumers to make real-time purchases online without a credit card. This is especially valuable to consumers who want to avoid using a credit card and being charged a surcharge, for instance when booking an airline ticket. It is also useful for high-value items where it is cost prohibitive for merchants to accept payments via credit card, such as online gambling where foreign exchange is being used.

Businesses love POLi because we are a low-cost payment method and we provide them with more certainty. Plus, payments via POLi are not subject to chargeback or reversals like credit cards or direct debit.

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