Banks push out plans to retire batch payments system

A plan by Australia’s banks to retire the batch-based system that processes $17.4 trillion in welfare, pension, salary and bill payments annually has hit a roadblock, with the system’s target end-date scrapped.

AusPayNet - whose members are banks, credit unions and building societies - yesterday “removed” the target end-date of June 2030 for the Bulk Electronic Clearing System, better known as BECS.

The long-term goal is to migrate payments off BECS and onto a system like the New Payments Platform, which facilitates real-time rather than overnight payments.

While considered “highly reliable”, BECS is 30-plus years old and in need of “significant changes … to keep it fit for purpose,” the Reserve Bank said in a risk assessment [pdf] of the transition earlier this year.

AusPayNet chair John Brodgen said challenges had emerged in the past two years that required a rethink of the transition timeline for the BECS switch-off.

“It remains the intention of BECS Members to transition away from BECS in favour of modern alternatives like the NPP, which is the industry’s strategic account-to-account payments system and the focus for investment and innovation,” Brodgen said.

“We remain committed to the stability and resilience of BECS for as long as it continues to operate.”

AusPayNet said the target date was never a mandate, and was subject to a range of conditions being met.

Speaking at AusPayNet’s summit yesterday, RBA’s assistant governor (financial system) Brad Jones said that “a foundational element was missing in the migration to modern payment rails – a shared vision among industry on the desired features of the future system.”

BECS and NPP are overseen by two different organisations. Adoption of NPP is still not uniform, with many smaller institutions still not offering it to customers.

Jones said the central bank “shared industry concerns that loading more risk onto modern rails that had higher outage rates than the legacy bulk system was going to be problematic if contingency arrangements were not also significantly uplifted.”

“As we have said all along, if it takes industry a little longer than originally envisaged to come to a shared understanding of the system’s central features, then it should be time well spent,” he said.

AusPayNet said it is working with Australian Payments Plus - overseer of the NPP, along with the RBA and the Commonwealth Treasury “under an ACCC authorisation to help shape a shared vision for the future of account-to-account payments in Australia and define a roadmap of high-level deliverables and milestones for achieving that vision, including clear prioritisation and sequencing, with both expected in 2026.”