Banks may be forced to introduce real-time payments by end of 2019
The RBA said the banks' slow rollout of real-time payments is disappointing and has delayed the NPP.
The Reserve Bank of Australia (RBA) has recommended that Australia's banks be mandated to introduce New Payments Platform services to their customers. The recommendation is one of 13 made by the regulator in a new report, announced in April, looking into the functionality of and access to the New Payments Platform.
The New Payments Platform (NPP) is Australia's new payments infrastructure and was launched on 13 February 2018. Through the NPP, individuals and businesses can send and receive data rich and near-real-time payments between financial institutions. The NPP is also open access and supports overlay services to develop payment innovations.
However, NPP services need to be rolled out to individuals and businesses through individual financial institutions. While the RBA said in its report it knew the rollout would take time, it admitted the time taken by financial institutions to make NPP services available to customers had been disappointing.
"The slow roll-out of NPP services by some larger banks has been disappointing and overall NPP volumes have grown more slowly than was initially hoped. While it was always expected that financial institutions connected to the NPP would roll out customer services according to their own schedules and priorities, this roll-out has occurred more slowly than anticipated," the RBA said.
To ensure a timely rollout of the NPP's current and planned functionalities, the RBA recommended the NPPA Board "should have the power to mandate that changes to the central infrastructure or native capabilities of the NPP must be supported by participants within a specific timeframe".
This would be backed up by enforceable sanctions, including possible financial sanctions, and be introduced by the end of December 2019. The RBA also recommended that NPP participants, which are organisations directly connected to the NPP, should prioritise the rollout of NPP services to their entire customer bases.
According to the RBA's report, there are significant differences between what payments can be initiated and the payment limits in place. For example, most banks have made NPP payments available to retail customers but many business and corporate customers do not have access. There are also differences in daily payment limits between institutions.
"The incomplete reach of the NPP and the partial functionality offered by some of the major banks has disappointed end-users that have been keen to utilise the NPP and has also likely delayed the development of new services that would extend the NPP's capabilities."
The RBA will conduct another review into the NPP by July 2021.