The Reserve Bank of Australia has a New Payment Policy (NPP) coming near the end of this month. Scheduled to take place following Australia Day, the big four banks as well as 50 additional financial institutions will now have real time bank transfers – approving and clearing your transactions in less than a minute.
This means when you send through your payment for a service or product online, or are waiting to be paid yourself, it will show up immediately rather than the traditional 3 to 5 business days.
While this might seem like a breeding ground for scammers and thieves, financial institutions are obliged to have security measures in place to manage the increased risk.
Artificial intelligence has been created to respond immediately to unusual or uncharacteristic account behaviour, as well as incorporating tighter security measures to access funds or pass on your details to a potential payer. Individuals and businesses will have the option to create a PayID that allows others to transfer funds to them instantly, without having to release private account information such as the BSB or account numbers.
This is a change that comes with significant benefits.
1. Buying and Selling
There will always be those willing to scam others, but with real time bank transfers it changes the landscape for those who use buy and sell and other marketplace websites.
Traditionally, a seller wishing to offload goods has two options. Wait for the purchaser to attend with cash to pick up the item, or hold the item in the hope that a bank transfer will come through. Both of those options come with a downside. Cash, while in general considered to be safe, is still subject to counterfeiters. And delayed bank transfers leave the seller holding onto goods with no guarantee of follow through.
Sellers on these unofficial buy/sell pages are often at the mercy of buyers. The real time bank transfers NPP means that a buyer can attend to purchase an item, send an online payment immediately while the seller waits and receives it in the same moment. The seller has guaranteed legitimate payment before releasing the item and hasn’t had to hold the item and lose other potential sales while they wait.
2. Pay Day
When your employer pays you, you get paid. The benefit here is obvious to anyone who has bills to pay. If you work for a company that has a scheduled payroll date each week or month, you know you’ll be paid that same day.
There won’t be any waiting for payments to clear, no blaming the weekend for the holdup, and no more bouncing on your direct debits because your pay didn’t come in when expected.
For those who have regular payments they have to meet, unreliable pay days have been a source of financial stress that the NPP will remove.
3. Small Businesses
This new policy is great news for small business. Not only for receiving prompt payment from customers, but also for making payments.
Currently, in order to make due dates for payment to suppliers and service providers, it’s necessary to submit the payment 3 to 5 days earlier. This sometimes leaves small businesses good name and credit at the mercy of a long weekend, public holidays, or other unexpected transfer delays.
With real times bank transfers, not only will the payment transfer immediately, but this gives small businesses more time to make the payment and gather the funds. This means the money can spend a few more days in the business account before transferring it to the payee.
Business owners will be able to receive payment for an invoice from a customer and then pay a supplier with those same funds, all in a matter of moments.
Making this change work for you
If you have any doubts about the security of your accounts, now is the time to address your security protocols and access details. Your bank or financial institution will be able to advise you on measures you can take to tighten up security at your end so you can reap the benefits of this new policy.
When you are able to pay and receive payments straight away it will speed up processes for individuals and businesses. It will increase your control over your finances, the speed and amount of transactions you can process in a day, and improve competition in a technological world.