Caption: A few of the BPAY ICS team
Prime Minister Malcolm Turnbull’s announcement of a new National Innovation and Science Agenda has set the nation’s blueprint for enabling entrepreneurs and businesses to create high value jobs, and deliver on his call for an innovative country.
Already being built in the background is Australia’s next generation payments system, and it will revolutionise how our economy evolves.
While the infrastructure being put in place to build the New Payments Platform
(NPP) will have little direct public visibility, the services that piggyback off that platform will be transformative.
BPAY first cab off the rank
The face of that transformation, when the NPP goes live in the second half of 2017, will be a new set of services offered by BPAY,
which through a competitive process, was appointed to offer the first service on the NPP.
While branding for the new service is yet to be unveiled, its current moniker, Initial Convenience Service
(ICS), belies the potential of the service to transform both personal and business payment platforms.
The service has three main components. The ability to instantly make a payment to anyone, the ability to request a payment and the ability to include documentation with a payment. Each component allows the customer to include more information than is available today through the existing payments processes.
These are all foundations which coupled with the ability to pay someone using their email address or mobile phone number, will become an avenue of innovation and transformation that even those building the NPP cannot predict.
BPAY Chief Development Officer Mark Williams says “From a 'pay anyone' perspective ICS will allow payments to be made from a mobile, tablet or internet via their online banking to a mobile number, email address, ABN, or the more traditional BSB and account number. And the funds transfer is instant from account to account and available 24/7.”
So when the plumber comes out to fix the pipes, you won’t have to wonder whether you need to jump in the car, get to an ATM, and withdraw cash to cover the bill. Instead you simply hit a banking app on your device, pay to the plumber’s mobile number and the plumber will get instant confirmation of the funds being deposited into their account.
The second component of ICS, request a payment, is not just a tool to hunt down reticent customers.
For instance, a group of 10 friends decide to go to a concert, but tickets are selling fast. One of the friends jumps online and buys 10 tickets at $100 each.
That payment is sitting heavily on his credit card, so now he grabs his phone, whips off nine payment requests to his friends and as they reply he is immediately credited with the funds to his account. The friends can access the ICS service via their own financial institution to instantly send a payment against the request.
The services will be rolled out through the BPAY member base so penetration should be rapid and have extensive impact at a consumer level, and readily adopted by business.
Data rich streams to drive business innovation
It could be said that these changes are more convenient than transformative, but there’s more.
Importantly, says Williams, each transaction will also carry more information than existing payments can carry today, that over time will become a data highway capable of generating innovation through ideas that have not yet even been contemplated.
Initially carried data will be 280 characters of information, a significant increase over the current 18 character limitations, says Williams. “That’s enough to provide plenty of information on what the payment was for.”
“But there is also capability for organisations to attach a PDF to carry additional information, which could be used to streamline remittance, dividends, payroll or tax.”
BPAY returns to forefront of innovation
For ICS Program Manager Sean Richardson, the launch of the platform will be a major development milestone for BPAY.
“The ICS”, says Richardson, “will put BPAY back at the forefront of payments innovation, as it was in 1997 when it was initially launched and became the dominant bill payment service in Australia.”
“We have been working on the ICS concepts for a number of years, with input from a wide variety of sources and extensive research.
“Now we have a dedicated team of about 30 payments and technology specialists we have drawn from within BPAY and our partners building the ICS services. That number shrinks and grows in size as required, but collectively the core team will have worked on the program from commencement to completion.
“It’s a great team and they are all professionals, with great support from the rest of the organisation” says Richardson.
Richardson says it was BPAY’s focus on delivering a real-time product which financial institutions could integrate into their customer channels and the potential to leverage the high recognition of the BPAY brand that helped BPAY to win a competitive process for the right to launch the first service off the NPP infrastructure.
He said ICS, along with all parts of the NPP, is currently in a build phase, and will enter into first phase testing in the third quarter of this year.
All participants in the NPP will take part in the multiple testing phases, with the subsequent testing phases progressively introducing more functionality so that when the NPP goes live the extensive minimum 18-month testing period will ensure full functionality on Day 1.
With ICS being included in all the testing phases of the NPP program it will also be a fully operational service from Day 1, offered via the institutions in the NPP. Branding for the new service is to be developed later this year.
However what will follow after the first service is delivered is still yet to be unveiled, says Williams.
He says the NPP is designed for flexibility and a capability to add on new services as they come to market, which was part of the original plan when the Reserve Bank of Australia (RBA) asked for innovation in the payments system in 2012.
Williams says it’s a sizeable investment but that the capability of the system to grow and adapt will give the NPP a shelf life of many decades. He also says it is attracting interest from across the globe, and it puts Australia back in the forefront of payments innovation.
There is also a predictable side effect from the launch of the NPP, in that each innovation that rides off its back will accelerate the shift to a cashless society.
As Williams puts it “ICS is the first service to be offered, and it certainly puts another nail in the coffin for cash and cheques.”
This article represents the views and opinions of the author and do not necessarily reflect the opinions of BPAY.
Published by BPAY Pty Ltd. BPAY is offered by over 150 Financial Institutions. Contact your Financial Institution to see if it offers BPAY and to get the terms and conditions. This is general advice – before using BPAY please review the terms and conditions and consider whether BPAY is appropriate for your personal circumstances.