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Faster Payments

Bank computer only work 9-5, 5 days a week

Ever since Banks started to computerised it is always annoyed me that they treated their computers as if they were employees. That they only work from 9 to 5, 5 days a week and didn't work on public holidays. With exception automatic teller machines (ATM’s).

I distinctly remember, well prior to the internet, having to pay my credit card bill and going to an automatic teller machine on a weekend and transferring the funds from my normal account to my credit card account only to find out that the transaction did not take place about another 10 days, such that I was charged interest for late payment. When I explained to a bank person that I had a receipt from the ATM saying that I've made the payment on a certain day and time and they should therefore reverse out the interest charges I was told the such payments actually take longer that processing it through the mail because data was manually keyed from the ATM system into ther Credit card system. This was despite the fact that the banks, at the time , were running advertising promoting the use of ATMs to transfer funds.

Banks dont pay interest on payments over weekends and Holidays

Fast forward 30 years, and regardless that we now have an Internet that allows us to send messages around the world instantaneously, banking things are not a lot different. If you process a payment online on a Friday, even though it shows as exiting your account on that day it will not end up in the receiver's account until the next banking day, which could be the Monday or even later if there are also bank holidays. Neither the sender of the money or the receiver of the money get interest on those weekends and bank holidays.

Reserve Bank 1959

Other than security the excuses that have been used by the banks for not providing a payment system that is 24/7 365 is because of Reserve Bank regulations that require Banks to settle with each other at the end of each day. That may have something to do with the fact of the reserve bank ACT, started in 1959.

Fast Settlement Service (FSS)

Well, some pressure seems to have been brought to bear such that the reserve bank now have instigated a computer system called, Fast Settlement Service (FSS), whereby Banks can settle with each other on a line-by-line transaction basis within a few seconds and it operates 24 hours a day seven days a week 365/6 days a year. No time off or holidays for the computers.

New Payments Platform (NPP)

This is only between banks. To facilitate the processing of payments between individuals and corporations a consortium of 8 organisations, which appear to be the traditional Banks, have formed an entity caller New Payments Platform (NPP). It is described on it home page as “The New Payments Platform is a world-class platform for payments innovation which can turn the possibilities presented by new ideas into real progress for Australian consumers, businesses and institutions. It’s designed to support an economy that never sleeps, never tires and never slows”.

Pay anyone any time instantly

2 sub parts of it (Overlay Services) are PayId and Osko.

Although it will allow a lot of new things to happen one of the abilities is, that with a mobile phone, or computer, a person can transfer funds to another person or institution with the funds being available to the receiving party within a few seconds. And this can be done 24/7 365.

Not being promoted as Fast Payments

I first heard about it under the umbrella term of PayID, whereby you can use your mobile phone number instead of a Bank BSB and account number. Currently that's the way the banks are promoting it. What they're not promoting is the fact that it can be done at any time and that the funds are available virtually, instantaneously. The cynic in me might say the reason they are not promoting the instantaneous part of it is because they want to maintain the status quo and so keep as long as possible their ability to not pay interest on weekends or public holidays on payment transactions.

My Experience using it

I thought I had been using it because I had registered a mobile number with the bank and had transfer funds to that mobile number. But it turns out the banks had a previous pay via mobile facility and that's what I was using rather than the new payments platform (NPP).

When I contacted the bank they said you're not allowed to use the NPP until you get invitation from the bank. Which I hadn't got, so I In reality I haven't nbeen using it.

I appreciate that the bank want to do a stage introduction but I don't see why that should stop them allow me to using it. Perhaps I will contact my local branch.

What does not currently seem to be provided

As described above I don't see any way of putting more than the normal number of characters of reference description. To be able to, the banks are going to have to modify their existing systems and particular interface screens so you can enter and more importantly view much larger description references.

Because of the way it's structured I'm not sure if I'm actually using the new payment system with my bank, Westpac

It could be that this is just an introduction to the new payment system via payID, and they're only using the facility to use an identification other than the BSB and account numbers and the processing just goes through the existing normal-slow Westpac's system.

I don't see any way in which I can use this new payment system to pay bills instantaneously.

Consequences of fast payments

If the new payment system is going to be able to transfer payments in a few seconds, what is going to also have to change, is the ability to schedule future transfers not on a particular day, but on a particular time on a particular day. Right down to the second.

People will also have to arrange at specific times right down to the second that people are going to transfer money to them. For example payroll. It will not be acceptable to just say that your pay will be in your account on a particular day, it'll have to be that it's gonna be in your bank at a specific time, down to the second. Because you may need to make payments knowing when funds are going to be available to the specific second. Remember the system is going to be available 24/7 365.

This may also have implications on the payments of interest. Currently Banks pay interest on the minimum daily balance. I wonder how long it will be before they pay on the minimum hourly or second balance?

It opens up the opportunity to have a cashless Society. Unfortunately there are many people that wish to have cash because of it's anonymity and untraceability taxation wise.

Ther are also many people that do not like the idea of transaction going through the reserve bank. Usually people are trying to hide things

Currently the new payment system is free to use by consumers. It will be interesting to see how long it stay like that

Business Opportunities

Retailers currently pay big fees to financial institutions and Banks, for the privilege to be able to accept people that use the big 3 credit cards providers. many people use credit cards for the convenience of not having to carry around cash. with mobile phone applications and the new payment system, that may replace credit cards. But somebody is going to be missing out and those that are currently making lot of money out of it I'm not going to be happy with it.

For where commodities are supplied virtually, it may be that you will be charged on a, as you use basis, rather than at the end of the month is currently happens.

Has been accepted so far overseas

From what I have read of the few countries that have implemented a fast payment system, the uptake has been relatively slow. Those that understand the time value of money appreciate the longer they can hold on to their money the more money they have. Having a fast payment system is no great advantage to them. In fact it would be a disadvantage. It's mainly an advantage to those that are going to be receiving money.

fast_payments.txt · Last modified: 2018/08/07 16:44 (external edit)