Later this year, New Payments Platform (NPP) Australia will launch APIs for PayTo, an initiative allowing customers and businesses to conduct cost-effective payments in real time - the first of its kind in the country. What should follow would be very similar to what we have seen with the introduction of Open Banking in the UK - a wave of innovation from financial institutions, service providers and payment companies that will change the way the average Australian pays for services.
Unless you are in the payments industry, you likely haven’t heard of this new service. Much like the NPP’s initial launch, there is a risk that this technology will launch and early uptake will be low due to a distinct lack of consumer awareness.
It got to the point where almost a year after the NPP’s launch in 2018, the Reserve Bank of Australia (RBA) asked the body managing the rollout to start penalising banks that were reluctant to sign on to the platform.
We can’t let history repeat itself with PayTo. For Australia to realize the full potential of this innovation, we need to create demand for it before it launches. This will place pressure on all financial institutions to work with fintechs to integrate the service into their offering as quickly as possible.
To understand why this is important, it's worth explaining how PayTo payments in Australia will work.
For your average consumer, PayTo is similar to a direct debit or subscription service with one fundamental difference. You can stop the service from withdrawing funds from your account at any time through pausing the payment agreement in your bank application, in real time. Your banking app will essentially become a hub for managing your subscriptions and bills.
For businesses, it allows you to directly debit your customers’ bank account via the NPP, allowing the funds to be withdrawn, cleared and placed in your account in a fast and cost-effective way.
Initially, it will directly impact how you pay for subscriptions and regular bills; the kinds of services you pay for every month. Over time, it could affect how you pay for your daily coffee, groceries and other products and services. This is just the start. There are all kinds of ways in which this form of payment can be utilized to create more convenience for both businesses and their customers.
The solution to rolling out PayTo as quickly as possible starts with the industry.
It’s up to Australia’s payment technology companies to serve as advocates for this new technology and educate consumers and businesses on its value. A mission Zai will be taking very seriously over the coming months.
However, the private sector can’t do this alone. As many fintechs are startups or growth companies, there is a limit to what they can do and the amount of Australians they can reach. There needs to be support, enthusiasm and investment from the government and the broader financial services sector in order to raise consumer awareness of PayTo. This could be in the form of informative advertising, detailed public awareness campaigns, or notifications to existing customers.
The good news is that compared to 2018, both the financial services sector and government are working more closely with the fintech sector than ever before. This latest technology rollout will be a test of the commitments both have made to the sector over recent years.
The NPP rollout well and truly demonstrated that a “build it and they will come” mentality does not work with fintech innovation. PayTo is the country’s chance to improve the pace of change typically seen with this line of innovation. This all starts with Australian consumers understanding what PayTo is ahead of its launch, and anticipating its functionality to hit their bank account this year.
Sanjeev Kumar, chief product officer, Zai
