Aussie FIs’ Real-Time Payments Tempered By Government Probe

Three of Australia’s four largest banks have rolled out real-time payments capabilities as the government launches a widespread inquiry into the financial services sector.

Reports in The Sydney Morning Herald on Tuesday (Feb. 13) local time said Commonwealth Bank, Westpac and National Australia Bank (NAB) have begun to offer their customers real-time payments services. Payments can transfer within less than a minute, reports noted, and users can transfer money to another account without the need for an account number. Instead, consumers create a PayID to initiate payments, which links their bank account to an email address, business number or other form of identification.

ANZ Bank, meanwhile, is waiting to roll out its real-time payments capabilities as it continues “rigorous testing” of the tool. A spokesperson for the bank told the publication it would be making an announcement in the coming weeks about its faster payments offering.

Additionally, the three banks that are ready to introduce real-time payments won’t immediately make the service available across all products and customers. NAB, for example, said its full real-time payments rollout would occur over the course of a month.

“Within the next month, all NAB customers will be able to create and use PayID through their mobile banking app, internet banking and NAB Connect,” said the bank’s Executive General Manager of Deposits & Transaction Services Rachel Slade in an interview with the publication.

Similarly, Westpac’s real-time payments capabilities will initially only be available under the Westpac brand, while the solution will expand to other brand names under the Westpac umbrella — including St.George, BankSA and Bank of Melbourne, “over time,” a spokesperson for the financial institution (FI) said.

The banks are linking into Australia’s New Payments Platform (NPP), a $1 billion project that has had heavy involvement from the nation’s Reserve Bank.

“We know that Australians are frustrated about the amount of time it takes to move money between accounts at different banks, which can sometimes be as long as two to three days,” said NPP Australia Chief Executive Adrian Lovney.

According to the SMH, Lovney said there will be no “big bang” launch of the NPP. Instead, its effects will be gradually felt across the economy.

“We’re estimating that by the end of the ramp-up period … 80 percent of Australians’ accounts will be connected,” he told the publication.

It is unclear how Australia’s faster payments infrastructure might impact B2B payments. As other jurisdictions’ real-time payments initiatives have shown, corporate payments are slow to embrace faster payments, though analysts see potential for accelerated transacting to take off in some areas of the enterprise, like payroll and employee reimbursements.

News of Australia’s real-time payments plans have been met with muted enthusiasm by some raising concerns about payments security.

“The days to protect from fraud and detect it before it happens are long gone in NPP land,” said Experian Head of Fraud and Identity Jon Malone in an interview with Domain last month. A spokesperson for the NPP told the publication that the infrastructure was built with an emphasis on security, though agreed “consumers should continue to be alert to potential scammers that try and trick you into making a payment to them, or tricky you into giving them your online banking login credentials.”

Government Probe

The real-time payments news was also dampened by separate reports that the government’s widespread investigation into Australia’s banking sector has kicked off.

Reports Monday (Feb. 12) in the BBC described the investigation as a “landmark” probe into the nation’s financial services market following accusations of wrongdoing and various scandals. Investigators held their first hearing Monday in Melbourne, during which Commissioner Kenneth Hayne noted the probe would be looking at whether banks’ behavior has been “below community standards and expectations.”

The nation’s top banks will likely be scrutinized hardest by investigators, which will hold the first round of public hearings next month with a focus on allegations of misconduct in banks’ mortgage, credit card and lending operations.

In one of the more recent issues of alleged misconduct, reports last week in Dynamic Business said ANZ agreed to refund corporate customers nearly $8 billion in response to its failure to adequately disclose interest and fees linked to its commercial card products. The Australian Securities and Investments Commission said small businesses will receive a large portion of that refund.

Last year, Prime Minister Malcolm Turnbull described plans for the investigation as “regrettable but necessary.”

“The only way we can give all Australians a degree of assurance is a royal commission into misconduct [in] the financial services industry,” he said.