Distributed NPP model wins industry approval

NPP Steering Chair, Paul Lahiff, speaking before the signing of the 3cm thick pile of contract documents with SWIFT, said that an efficient payments system was critical to the effective functioning of the Australian economy and that the NPP represented: "the plumbing for the economy of the future."

Gottfried Leibbrandt, SWIFT's global CEO meanwhile described the company as the "financial plumbers of global financial services."

It's innovative plumbing however. Unlike the rival bid, which Leibbrandt yesterday told Banking Day involved a more traditional hub-and-spoke model with payments data funnelled through a central computer system, the NPP will be more distributed.

The payments data itself will be retained by the banks rather than held in a separate NPP computing facility.

"It will connect the players over a network and exchange payments directly, copying the central bank for settlement," Leibbrandt said.

Chris Hamilton, chief executive of the Australian Payments Clearing Association, said that the network would be built using the ISO 20022 standard. This allows data about the transaction to be transmitted in parallel with the actual payments information.

Using that standard allows much richer payments information to be accessible to users of the network, and in theory would allow an international connection to other payments systems in the future.

However, Leibbrandt said constructing a global payments network would be "an order of magnitude more complex" due to multiple currencies, different international legal systems and cross border know-your-customer regulations.

No mention was made of the runner-up consortium yesterday, although Hamilton confirmed APCA  "worked on two solutions with two providers to get competitive tension."

Banking Day reported in September that SWIFT and Fiserv would be the likely winners of the deal, although there were still protracted contract negotiations among the 12 founding members.

Another high profile consortium which bid for the NPP comprised FirstData, Accenture and VocaLink (which set up similar fast payments systems in Singapore and the UK) although it was not confirmed yesterday whether they were in fact the runners-up.