Reserve Bank calls for New Payments Platform access to be broadened

The Reserve Bank of Australia has called for access to the New Payments Platform to be broadened a range of payments services providers.

Currently, participating in the NPP requires an ADI (authorised deposit-taking institution) licence. However, the RBA says in its view the platform’s operator — NPP Australia Limited (NPPA), which is owned by 13 financial institutions including the RBA — should cast the net wider for NPP participants.

“There may be entities that are ineligible to become ADIs because of the nature of their business (e.g. because they are specialised payment providers and do not take deposits or make loans),” a report released yesterday by the RBA stated. “However, they might still be able to meet reasonable and relevant technical, operational and risk management requirements to participate in the NPP.”

In October last year the RBA, with the support of the Australian Competition and Consumer Commission, launched a consultation on the functionality of the NPP, which was launched in early 2018.

The NPP provides a number of features for its participants including real-time payments, a new addressing system, and support for overlay services (currently only one, Osko by BPAY, has been rolled out).

The RBA said that a number of stakeholders, particularly some fintechs, had indicated to the bank that the ADI requirement was an “excessive and unnecessary barrier to entry that undermines competition”.

The RBA said that by the end of October, NPPA should present it with options for broadening participation in the platform, with a view to implementing new rules by March 2020.

The RBA also said NPPA should introduce a sanctions regime for financial institutions that are NPP participants but don’t support core capabilities of the system.

The RBA has previously expressed concern about the sluggish uptake of the NPP, including its PayID feature, which allows an email address, phone number or other form of identity to be used as an alternative to a BSB and account number when making payments.

The RBA report outlining its conclusions from the consultation process recommended that by the end of December 2019, NPPA introduces a power for its board to mandate that “core capabilities” of the NPP must be supported by platform participants within a specified timeframe. Failure to meet those obligations should be met with sanctions, including possible financial penalties, the RBA report said.

“While the major banks have now largely completed the roll-out of NPP services to their retail customers, the roll-outs to business and corporate customers are ongoing and some banks have yet to provide NPP services to their subsidiary brands,” the report states.

The Reserve Bank said that NPPA and participating institutions should release a public roadmap outlining plans for the implementation of additional features for the NPP, some of which — such as extension of the NPP API framework and third-party payment initiation — are already in train.

Although an NPPA roadmap will assist, “the experience to date highlights the risk that delays in the projects of particular participants may threaten the delivery or launch of some of this additional functionality,” the RBA concluded.