Greater Capability & Risks On Australia's Payment Platform


Real-time payments and increased business opportunities will also come with greater risk of fraud, following the launch of Australia’s New Payments Platform (NPP).

Upon its launch in the second half of 2017, the $1 billion network of payment infrastructure promises to deliver bank transfers within seconds, but experts are warning of a greater potential for fraudulent transactions to occur.

The NPP is a new network of open-access payment infrastructure being developed collaboratively by several of Australia’s major banks, along with the Reserve Bank of Australia. It consists of a new network connecting participating banks, along with an addressing service that allows payments to be verified by details such as an email address or phone number linked to a customer’s account. This eliminates the need for BSBs or account numbers to be remembered, and allows details to be easily transferred between accounts.

In addition to easier payment verification, the NPP also features a Fast Settlement Service provided by the Reserve Bank. This service allows every payment on the NPP to be settled using central bank funds as a third-party medium, which speeds up transfers and eliminates counterparty risk between institutions.

However, the approval of payments on a 24/7 basis, in close to real time, means that banks will have far less opportunity to review or block suspicious transactions before they clear. The use of more common identifiers such as email addresses or phone numbers also opens the door to fraudulent transactions being made more easily.

The Australian Payments Clearing Association (APCA), the payments industry’s self-regulatory body, reported in December that the banking industry is continuing to upgrade its anti-fraud systems in response. Measures include real-time fraud identification and prevention using dedicated analytics, improved cardholder authentication, and adherence to updated global card security standards.

Not much to report

Rates of transaction fraud in Australia remain relatively low. Aussies spent $703 billion using cards during the 12 months up to 30 June 2016, and just $521 million of this – 0.074% – was fraudulent. Nevertheless, this was an increase from the 0.06% of fraudulent transactions in the previous financial year.

The vast majority of fraud (and fraud increase) in Australia was in ‘card-not-present’ fraud, or CNP fraud. This refers to when card details are stolen and used to make purchases without the card present, a practice which can potentially lead to huge losses with the continued proliferation of e-commerce.

The APCA reported that CNP fraud accounted for 77% of all fraud on Australian cards, increasing from $323 million to $402 million in the past financial year. Thankfully, Australian customers are not liable for any losses due to fraudulent use of their payment cards – should you become a victim of fraud, your financial institution can fully reimburse you in most cases.

Look on the bright side

Despite an increased potential for illegal use, the benefits of the NPP greatly outweigh the downsides. In addition to providing real-time transfers between financial institutions, the new infrastructure can transmit huge amounts of data including complete remittance information, which makes tracking payments even easier.

The NPP will also underpin a near-limitless range of ‘Overlay Services’. These are simply any third party service that involves making payments and funds transfers, including e-commerce websites, funds and investment management, insurance, superannuation funds, and much more.

The first overlay service by BPAY will allow fast, data-rich payments between all Australians and is designed to reduce the use of cash and cheques. It will be used by people to move money from person to person in near-real time, for example when out at dinner, or even paying a freelancer on the spot.

The NPP is scheduled to come online sometime in the second half of 2017, allowing you to make payments from your account which will clear in seconds. In the meantime, make sure you’re comparing your payment options to ensure you’ve got the best services for your needs.



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