12 find a budget for NPP
Financial messaging behemoth SWIFT was yesterday finally confirmed as the winner of a 12-year contract to build and operate Australia's New Payments Platform. The cost to industry participants of the project will be more than A$1 billion.
In return for that investment the banking industry expects access to a real time payments system, able to handle fixed and mobile payments and also provide rich streams of data about payments.
Although 17 financial institutions originally worked together on the initiative, by yesterday that had dwindled to just the dozen prepared to stump up the cash to fund the venture from day one.
The founding members are ANZ, Australian Settlements, Bendigo and Adelaide Bank, Citigroup, Commonwealth Bank, Cuscal, Indue, ING, Macquarie Bank, National Australia Bank, Reserve Bank of Australia and Westpac.
These organisations will pay SWIFT and Fiserv for their services establishing the NPP and will also build the connectors linking their own networks to the NPP.
It is this web of bank-to-bank networks which forms the NPP.
Phil Chronican, ANZ Australia CEO, noted at a briefing in Sydney yesterday that creating the NPP would require substantial internal investment by the 12 founding members.
"We have to prepare for customers to send and receive (payments) in real time and acknowledge that in real time also," he said, adding it would require substantial investment to facilitate integration with the banks' core systems.
Bank of America, HSBC, Bank of Queensland, Suncorp and PayPal were initially involved but have all stepped back from this next phase of the project. They could buy their way back in the future, said APCA CEO Chris Hamilton.
Hamilton said that, in terms of future access to the network: "Anyone who is an ADI should be able to access the NPP. But it is not necessary for every ADI to be direct connectors."
Instead, organisations could be indirectly connected through one of the organisations with a direct NPP connection that could offer gateway services.
The basic network will comprise three parts - the connectivity layer, which will run on the equivalent of a broadband network; the switch, concerned with how payments are routed across the network, error handling and all the protocols around handling of exchange of data.
And the third part of the basic infrastructure is the "addressing database" element, which is concerned with the facility to route a payment based on identifiers other than BSB and account numbers (for instance, mobile phone numbers).
These would be provided by the relevant ADIs, to be matched through a central database, and that component is to be hosted in Australia and managed by Fiserv.
So far Fiserv has been the only "subcontractor" firm announced. However, the first overlay service provider is likely to be announced "soon", said industry insiders at the launch.
SWIFT will work with the founding members to complete the final design of the solution by late 2015 and also identify what each member needs to do at their end to complete the networks.
The NPP should go live in the second half of 2017 - later than originally envisaged in part due to an extended tendering process, and also because the winning solution will see both the payments engine and addressing system released at the same time.
Gottfried Leibbrandt, SWIFT's global CEO, who was in Sydney for the contract signing yesterday, said that even the 2017 deadline was "fairly ambitious" although he felt it was achievable.