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NPP The Australian Experience

Susan BrayExecutive General Counsel, Australian Payments Clearing Association Limited

Disclaimer 2

Please note that any views expressed in this presentation are the personal views of the speaker and do not necessarily represent the views of the Board of NPP Australia Limited, Australian Payments Clearing Association Limited or individual payment system participants.

Why are we doing this? Pressures: regulatory demands

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“….market forces might not be sufficient to produce some types of innovation that are in the public interest…[and] innovation is important to [the Board’s regulatory] mandate”

Payments System Board, Reserve Bank of Australia, June 2012

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Real Time Payments Committee, 2012

In Australia we did some serious thinking….Two key assumptions arise: • There will be a wide diversity of user

need for real-time payments… the needs of particular communities, and particular contexts, are becoming more bespoke and tailored …automated and remote.”

• Payment systems, schemes and services will themselves become more diverse and more competitive over time. …payment systems and schemes are becoming more commercial and competitively oriented.

5The Australian Model:the New Payments

Platform

Elements of basic infrastructure 6

Ubiquitous open networkISO20022 global standardFast ADI to ADI turnaroundNew platform, not a replacementReal-time value delivery through RBASimple Addressing

Overlay services – key concepts 7

Using the infrastructure, but commercially runVaried and potentially competitivePayment providers must belong to infrastructure, but can choose which overlays to useExtra “tailored” data – to link payment with transactionConditionality

Why do it this way? 8

Versatility– Providers need to serve all, any time: p2p, b2b,

g2g…Speed– In the era of the cloud, customer expectations are

for real-time service.This must be built in.

Data - richness– As economic activity goes fully digital, the payment

must be embedded in the transaction.

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Who gets to play?“Participants” have equity in NPPA; they clear payments and/or process value“Identified” ADIs control accounts“Connected” institutions sign and send messages A “Settlement only Participant” uses another ADI to clear

ParticipatingADIs

All End UsersSettlem

ent only Participant

Conn

ecte

d

Identified ADIs

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Case Study – New Payments Platform AustraliaHow it works

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Payer / Ordering Customer

SWIFTPaymentGatewayBank

Channels

SWIFT Payment Gateway

Fast Settlement Service

Addressing Database

$24h

Overlay Services

Payee / Beneficiary Customer

SWIFTPaymentGateway Bank

Channels

Ordering CustomerBank

Beneficiary Customer Bank

RTGSCentral Bank

Settlement

Clearing

Settlement1

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Clearing happens directly between debtor and creditor banks

Successful clearing triggers immediate settlement in RBA’s central settlement engine

First Overlay: the Initial convenience service

• Mass-market, convenience

• Intended to prove concept and encourage use

• FIs to promote to their customers

• BPAY recently announced as ICS provider

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Account-to-Account GapMobile convenience service

Ubiquitous POSEmergency Payments

Direct to account ticketing / tolls

Workflow ManagersConditional Payments

Alternative Currency RedemptionProperty Transfer

Data Rich Use of ISO MessagesElectronic invoicing and remittances

Data rich payments

Participant servicesFraud monitoring

Batching

Possible Overlay Services

Potential new overlays 14

Things we learned 15

Determine which elements are collaborative and which are commercialAgree high level architecture early, but remain flexibleRobust governance processes – so decisions stickProgram management and implementation challengesClear statement of objective that guides all subsequent decisions

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NPP The Australian Experience

Susan BrayExecutive General Counsel, Australian Payments Clearing Association Limited