Australian banks have agreed to establish a centralised payments clearing utility by the end of next year to meet the Reserve Bank’s call for real-time payments between institutions.
The Australian Payments Clearing Association (APCA) yesterday outlined its proposal for a “layered” real-time payments system comprising central, general-purpose infrastructure on which commercial services may be built.
The proposal was developed by APCA’s Real-Time Payments Committee, involving the big four banks, Citigroup, Cuscal, APCA’s CEO and independent chair Jenny Fagg.
It was accepted by the Reserve Bank’s Payments System Board last Friday.
Under the proposed model (pdf), all financial institutions would connect to an open-access clearing utility called Utility Co, which linked to centralised Reserve Bank settlement facilities and used the ISO 20022 message format.
Utility Co would also have addressing capabilities, so that by the end of 2017, payments could be routed using details such as a mobile phone number.
APCA’s Real-Time Payments Committee favoured a greenfields approach to building the central infrastructure layer, to minimise impact on existing systems and facilitate a long-term approach.
“[Financial institutions] will need to be connect and be able to receive transfers, but are free to choose what services to offer their customers using the infrastructure,” it proposed.
By 2016 – the Reserve Bank’s goalpost for real-time retail payments – APCA proposed that an “initial convenience service” be introduced by a selected service provider to demonstrate the benefits of the new infrastructure.
“The design of this service will depend on its commercial evolution, whether it is provided by an existing payment service or scheme, or developed from scratch,” APCA noted.
“However, the Committee’s intention is that it will focus on personal convenience payments, particularly those using mobile channels.”
The Reserve Bank’s Payments System Board stated that it would continue to work with the industry to ensure that Utility Co arrangements were consistent with the central bank’s objectives and the public interest, so as to minimise the need for future regulatory intervention.
“The Board expects that this structure will meet its objective of achieving general availability of fast payment services to account holders,” the Reserve Bank stated.
“In the event that this proved not to be the case, however, the Board would consider setting some minimum customer service standards for Clearing Utility participants.”
NAB executive general manager of working capital services David Gall welcomed the move towards a national real-time payments system as an important step for the industry and customers.
“It will be a catalyst for increased competition between payment providers and foster greater innovation - in particular to mobile payments,” he said.
“Businesses will have access to more timely information, helping them better manage their business and cashflow. Ultimately it'll provide businesses as well as consumers with a wider range of payment options best suited to their needs.”