new payments platform a technical overview · service is offered to participants and their...

Bob Masina General Manager, Technology & Operations, New Payments Platform Australia

New Payments Platform A Technical Overview

NPPA Webinar

14 September 2017

© NPP Australia Limited

Today’s Webinar

Page 2© NPP Australia Limited

Will be a technical overview of how the New Payments Platform works, covering:

• The architecture of the platform

• The NPP message set

• How Overlay Services will work

• Questions


Where are we in the journey?


June 2012RBA’s Strategic Review on Innovation in the Payments System

Feb 2013Real Time Payments Committee Proposed Way Forward

June 2013New Payments Platform Programme created

Q4 2017New Payments Platform –Open for Progress

Dec 2014NPP Australia Limited established

2017Participant and Industry Testing


How does the NPP work?

Connection to the NPP Basic Infrastructure and Addressing Service is via NPPA/SWIFT-supplied Payment Gateways (PAGs)

The NPP PAGs are configured to support processing and routing of transactions between PAGs, the Addressing Service and the RBA’s Fast Settlement Service

The NPP uses ISO 20022, the global standard for electronic data interchange between financial institutions

Overlay Services can sit on top of the Basic Infrastructure to offer different customer value propositions and experiences

NPP Regulations and Procedures define technical, operational and security requirements and liability for fraud, Misdirected Payments, Mistaken Payments and Error Payments

Bank Channels

Payment Gateway

Payer

Addressing Service

NPP Participants (Financial Institutions)

Fast Settlement Service

Reserve Bank Information and

Transfer Service (RITS)

Reserve Bank of Australia

Clearing Request and Notification

Settlement Notification

Payment Gateway

Bank Channels

NPP Participants (Financial Institutions)

Payee Settlement Notification

Settlement Request

Payment Gateway

Overlay Services



What is PayID?

• A core, customer facing component of the NPP which is both -

− an access controlled, secure repository of encrypted customer account information

− an addressing service which enables Payer Participants to create clearing messages at Payer’s request using Payee’s easy to remember account proxy

• Four alias types will be available initially – phone, email, ABN/business numbers and organisation identifier

• Customers will register PayIDs in the Addressing Service via their financial institutions (privacy consents will be in place)

• Registering financial institution responsible for effective, correct, authenticated registration

• A PayID can be moved easily between accounts and between financial institutions

• Payments can be initiated to a PayID or to account details (BSB/account number)

• If a payment is PayID initiated, the Payer will be able to check the PayID Name linked to the PayID and the account before authorising the payment



ISO20022 Messaging

Global Interoperability

Rich Data Remittance

Uniform and reusable messages

All NPP messages are in the ISO20022 message standard. ISO20022 is a standard for financial messaging using XML syntax. ISO20022 provides a flexible framework to build business transactions by opting for a single, common "language" for all communications as well as the carriage of additional information with a payment.


NPP Message Types

Function Message Type Name

head.001.001.01 Business Application Header

pacs.002.001.06 FI to FI Payment Status Report

pacs.008.001.05 FI to FI Customer Credit Transfer

pacs.004.001.05 Payment Return

pacs.009.001.05 Financial Institution Credit Transfer

camt.052.001.05 Bank to Customer Account Report

pain.001.001.06 Customer Credit Transfer Initiation

pain.002.001.06 Customer Payment Status Report

pain.013.001.04 Creditor Payment Activation Request

pain.014.001.04 Creditor Payment Activation Request Status Report

camt.029.001.05 Resolution of Investigation

camt.030.001.04 Notification of Case Assignment

camt.035.001.03 Proprietary Formal Investigation

camt.056.001.04 FI to FI Payment Cancellation Request

FI = Financial Institution

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Routing


NPP Message Types – Clearing & Settlement Messages

Branch

Mobile

Phone

Internet

Service

Application

Payment Gateway

(PAG)

Payer Customer

Addressing Service

Payment Gateway (PAG)

RBA Fast Settlement

Service

PACS.008

Clearing

Settlement

Payer Customer Bank

Branch

Mobile

Phone

Internet

Service

Application

Payment Gateway

(PAG)

Payee Customer

Payee Customer Bank

pacs – Payments Clearing and Settlementcamt – Cash Management

1. Payer initiates a payment via a bank channel (i.e. mobile)

2. Payer’s FI can make use of the NPP Addressing service (PayID) in the event the payee uses a PayID

3. Payer’s FI sends a pacs.008 to the payee’s FI4. Payee’s FI clears the payment and responds

to Payer’s FI with pacs.002 as confirmation the payee’s account is able to be credited

5. Payer’s FI initiates settlement by sending pacs.009 to RBA. RBA transfers the value between the two FIs in real-time

6. RBA sends pacs.002 as a settlement confirmation to both FIs

7. Payee’s FI credits Payee subject to specific overlay requirements

8. Individual FIs may optionally have a camt.052 sent from the RBA for periodic balance report

Inside Basic Infrastructure (BI)

PACS.002

PACS.002 PACS.002

PACS.009

CAMT.052CAMT.052


What is a Payment Initiation (PAIN) message?

Payment Initiation Authorisation Clearing Settlement Post-Payment Fulfillment

PACS message:

• Credit payment message

• Message for a payment to be cleared and settled

• Results in the actual movement of funds between accounts

• Is the responsibility of NPP Participants to execute

PAIN message:

• A non-value message seeking initiation of a payment message

• Requires authorisation by the account holder prior to clearing message creation

• Can be sent but there is no requirement for the receiver to action (this is where the Overlay Service Provider would define how it is treated)


How can PAIN messages be used?

End User? Submitted to BI via? How authorised by Account Holder?

• End customer

• Participant

• Corporate

• Fintech

• Agent/service provider

• Merchant

• Participants

• Identified Institutions

• Connected Institutions and Connected Overlay Service Providers (via own PAG)

The PAIN must be authorised for the payment to be actioned. This can be done (implicitly or explicitly) by mechanisms such as:

• Account holder approval on a transaction by transaction basis (e.g. “pop-up screen”)

• Mandate process (typically used by merchants)

− One off, rules based

− Standing/recurring

• Transaction Negotiation Authority (TNA) standing authorisation (agent/service provider/bureau)

• Corporate commercial relationship

PAIN messages can be used in a variety of ways and to suit a different range of use cases

End users can submit PAIN messages to the NPP Basic Infrastructure in different ways


NPP Message Types – PAIN Messages

Bank Channels

Payment Gateway

(PAG)

Addressing Service


RBA Fast Settlement Service

Clearing

Settlement


pain – Payment Initiation

1. Organisation sends pain.001 to FI 2. Organisation’s FI can make use of the

NPP Addressing service (PayID) in the event the payee uses a PayID

3. Organisation’s FI sends a pacs.008 to the payee’s FI

4. Payee’s FI clears the payment and responds to Organisation’s FI with pacs.002 as confirmation the payee’s account is able to be credited

5. Organisation’s FI initiates settlement by sending pacs.009 to RBA. RBA transfers the value between the two FIs in real-time

6. RBA sends pacs.002 as a settlement confirmation to both FIs

7. Payee’s FI credits Payee subject to specific overlay requirements

Payment Initiation

Bank Channels

Payment Gateway

(PAG)

PAIN.001

PAIN.002

PACS.008

PACS.002

PACS.002 PACS.002

PACS.009

Organisation

Payees


NPP Message Types – NPP Investigations

Back Office Processing

Payment Gateway

(PAG)

Addressing Service


RBA Fast Settlement

Service

Investigation

Back Office Processing

Payment Gateway

(PAG)


camt – Cash Management

1. Financial Institution A advises Financial Institution B of formal investigation by sending camt.035

2. Financial Institution B sends camt.029 to Financial Institution A once investigation has been resolved

CAMT.035

CAMT.029

Financial Institution A Financial Institution B


NPP Message Usage Framework

Overlay Service Providers can build upon the foundation layers of ISO 20022 NPP message usage to develop new innovative services

Example: Osko & pacs.008

ISO 20022 Schema: Unstructured Remittance Information – limited to

2 x 140 characters

Related Remittance Information - to carry the URL of an externally hosted document

ISO 20022 Schema

Foundation LayerNPP Core Elements(cannot be altered)

Innovation Layer (Available for

Future Overlays to Define)

New Payments Platform


How does an Overlay Service work?

Overlay Service Provider defines the message set and data content to be used and how the flows will work (could be simply rules based or could involve a change to the current message set)

Service is offered to Participants and their customers

Once approved by NPPA, overlay service will be added to a closed user group with those Participants who choose to subscribe to the service

Overlay Service Provider manages ongoing governance and membership of service

Can be connected or non-connected to the Basic Infrastructure


NPP’s First Overlay Service


NPP Overlay Service – Osko by BPAY

Branch

Mobile

Phone

Internet

Service

Application

Payment Gateway

(PAG)

Payer Customer

Addressing Service


RBA Fast Settlement

Service

Clearing

Settlement

Payer Customer Bank

Branch

Mobile

Phone

Internet

Service

Application

Payment Gateway

(PAG)

Payee Customer

Payee Customer Bank

• Quicker moving money – funds received in less than 1 minute

• More ways to address a bank account – no need for account details when using PayID

• Easier messaging – more explanation with up to 280 characters or a document url

• Ability to request to be paid – simple requests with up to 280 characters using PayID

• Confidence in Delivery – customer can receive immediate confirmation

• Through your FI – Osko will be in the majority of FIs mobile and internet banking platforms

• Easy to track if requests have been paid – easily track and reconcile which payment requests have been paid in full or part

• Confidence in who you’re paying or sending a request to – PayID name is displayed to confirm intended recipient


PACS.008

PACS.002

PACS.002 PACS.002

PACS.009

CAMT.052CAMT.052


Osko by BPAY Customer Journey: Making a Payment

Eva wants to make a payment to Company ABC of $250

Eva logs into her FI’s mobile banking app or internet banking

Eva enters Company ABC’s PayID to direct the payment.

Eva’s FI sends a request to PayID to retrieve the account details

Company ABC has $250 deposited into their bank account and the funds are available for immediate use

Bank Logo

Log in

Eva selects Osko as her preferred payment channel and enters details required for a payment

Bank Logo

The payment is sent via the NPP to Company ABC’s bank account.

Eva receives a confirmation that the payment was successful

Enter PayID:

0411 222 333

PayID name: Company

ABC

A short name may be returned to help Eva confirm she has the correct recipient.

Eva confirms and makes the payment

Confirm


Examples


Example 1: Payroll files (outside of the BI)

Corporate Customer Payroll File – Salary

Payments

Payer Customer Bank

Clearing using NPP pacs.008

FI’s with Payee Accounts

Payment Gateway

(PAG)

Payee Customer Bank

Payee Customer

Payee Customer

Payee Customer

Payee Customer

Payroll file pain.001

Within NPP Basic Infrastructure

Could either be independent of an overlay or part of an overlay

Payment Gateway

(PAG)

Payee Customer Bank

Payment Gateway

(PAG)

Payee Customer Bank

Payee Customer

or Overlay defined pacs.008

ConfirmationEnd Customer Authorisation

Payment Gateway

(PAG)

Bank Channels

• Payment initiation messages could be sent from third parties, containing structured payroll data elements, e.g. Employer ID, Gross Income, Tax withheld etc.

• These structured data elements are carried through into the Clearing message or referenced via a url to an external data source if using an Overlay Service

• Payments can be cleared and settled in close to real-time, 24x7

• Payee Customer would receive both the payment data and payment linked together (if using an Overlay Service)


Example 2: Connected Overlay Service – Payroll

FI’s with Payee Accounts

Payment Gateway

(PAG)

Payee Customer Bank

Payee Customer

Payee Customer

Payee Customer

Payee CustomerOverlay pain.001

Within NPP Basic Infrastructure

Payment Gateway

(PAG)

Payee Customer Bank

Payment Gateway

(PAG)

Payee Customer Bank

Payee Customer

Connected Overlay Payroll Bureau with own PAG

Payment Gateway

(PAG)

Payment Gateway

(PAG)

Payer Customer Bank

FI’s with Payer Accounts

Payment Gateway

(PAG)

Payer Customer Bank

Payment Gateway

(PAG)

Payer Customer Bank

Clearing using overlay defined pacs.008

End Customer Authorisation

Confirm

• Payment initiation messages sent directly to Overlay subscribed NPP Participants, containing structured payroll data elements, e.g. Employer ID, Gross Income, Tax withheld etc.

• These structured data elements are carried through into the Clearing message or referenced via a url to an external data source

• Payments can be cleared and settled in close to real-time, 24x7

• Payee Customer would receive both the payment data and payment linked together


New Payments Platform – Key Takeaways


Available 24 / 7 / 365

Will be world-class using ISO20022 messaging

Data and payment travel the NPP together

Ability to use PayID instead of remembering my BSB and Account number

Real-time clearing and settlement


Questions

Thank you

©2017 NPP Australia Limited (ABN 68 601 428 737)Disclaimer: This presentation is for general information purposes only. Neither this presentation, nor any information contained in it, shall form the basis of any contract between NPP Australia Limited and any person, nor constitute a commitment by NPP Australia Limited to any person.© NPP Australia Limited

For more information please contact the NPPA team on [email protected]

new payments platform a technical overview · service is offered to participants and their...

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