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Fintechs and Payment Platforms

Monday 28 August 2017


Given the Reserve Bank of Australia’s (RBA) mandate for competition and efficiency, the bank takes a key interest in technological and product developments in the payments space.
 
These are the words of Tony Richards, the RBA’s Head of Payments Policy, who spoke at the Meet the Regulator event on 17 August at We Work, in Pyrmont.
 
Richards said the RBA is keen to understand what the fintech sector is looking to do and to achieve, so they can assist their efforts to be innovative.
 
He focused on the Payments System Board (PSB) and said that the mandate of the PSB is to promote efficiency, competition and stability.
 
There is little regulatory intervention—for example, no licensing regime system for payments systems or participants in payment systems. On those rare occasions where intervention does occur, it is usually as a result of competition issues.
 
The RBA has worked hard to facilitate competition in many spaces.
 
“For the most part, I think payment system regulatory arrangements will not be a constraint on the activities of fintech start-ups in the payments scheme,” Richards said.
 

New Payments Platform 
The New Payments Platform (NPP) is a new initiative, developed in response to the RBA’s 2012 strategic review of innovation in the payments system. The bank asked the payments industry to come up with a proposal for the gaps identified in the review.
 
“In response, a group of 13 large and small financial institutions have been on projects to build new payments infrastructure.”
 
Richards added the NPP would enable real-time payments for Australian households, businesses and government agencies, and would be constantly available and data-rich. This will represent a major step forward in the services provided by the RBA for users of the payment system.
 
This has been a major project for the bank, Richards explained, and a complex project for all participating institutions.
 
“The program is currently in the industry-testing phase, with the new system expected to commence processing payments later this year.”
 
While likely to start off small, it is hoped the system will gradually develop next year as financial institutions get the experience of operating in real-time on a 24/7 basis.
 
The organisation responsible for the NPP—NPP Australia Ltd—is keen to see its rapid growth.
 
“One element towards achieving that would be to ensure your entities are aware of all the functionality that will be made available by the NPP,” Richards said.