Richard Watson | Senior Partnership Executive
26th February 2024
Things move fast in the world of real-time payments, especially when a finish line comes into view. And there are a few of them lining up right now.
The government announced last year, for example, that employers will have to pay employees’ super at the same time as salary and wages from 01 July 2026. That's coming at us pretty fast. It has, not surprisingly, mobilised an entire industry to fundamentally change its service delivery.
As an aside, we're delighted to be having an impact in that space. Our first-of-a-kind partnership with OZEDI is delivering Australia’s first instant super fund payments via the New Payment Platform [NPP] with a new PayTo-powered SuperStream service.
More recently, the payments industry through AusPayNet set a target date of 2030 for the retirement of Australia's trusted payments workhorse, the Bulk Electronic Clearing System — or BECS.
BECS has done an incredible job since its inception in 1989. Yes, it was designed for another era, but we are massive fans of it at Zepto. After all, it reliably handles average yearly values of more than $15 trillion — the majority of Australian consumer payments based on value. Call it a 'trusted payments workhorse', just — as Zepto CEO Chris Jewell said on the Fintech Chatter Podcast with Dexter Cousins — don't call it 'legacy'.
"A lot of people talk about the legacy system of BECS. But I don't think of BECS as 'legacy'. I think of it as a Hall of Famer. In the context of what it's delivered to Australia, it has been incredibly powerful as an engine of the economy for decades."
The challenge as we pioneer the new 'possible' of the on-demand digital world, is that the BECS capability doesn't extend far enough. Its from-another-era shortcomings simply don't enable merchants to differentiate their products and services through payment innovation. But with that 2030 retirement timeline, every player in the payments ecosystem has a waypoint to navigate to. The payments innovation arms race has begun.
With a clear runway to 2030 now, merchants are motivated to migrate to the new 'possible' that the NPP can enable. And not just to future-proof their businesses. Their own customers now expect an always-on, engaging and trusted digital payment experience. Those merchants will quickly look to their payment aggregators such as acquirers, gateways and PayFacs to offer the full suite of real-time solutions. Inevitably, those that have planned for the transition will reap the rewards of being an early adopter.
The NPP, particularly now with PayTo in place, has the capability to support all the use cases we see on BECS today.
What's really exciting about PayTo is that it can unlock benefits for all kinds of organisations. It supports scheduled recurring, one off and even ad-hoc payments. Similar to having cards-on-file, PayTo opens up a world of real-time, account-to-account opportunities.
But there is much heavy lifting to be done right across the ecosystem to be ready for 2030.
Australian Payments Plus [AP+], home of the BPAY Group, eftpos and the NPP, has already acknowledged that it needs to enable sufficient capacity to process BECS payment volumes through the NPP. It can now support 50% of the current BECS volume while also allowing for future NPP growth from other payment types like cards. It will continue to implement additional capacity uplifts well ahead of the scheduled BECS retirement date.
AP+ also called out that a core area of focus is ensuring the NPP can process all types of transactions – in particular, payment files submitted in bulk.
This was a pretty hot topic in the Zepto Connect virtual fireside chat about payment predictions for 2024.
"When we think about use cases, one of the consistent messages we hear is that the challenge is going to be bulk payments. They will be the trickiest to move off BECS. As part of the strategic plan Treasury published last year, they announced they’d do a consultation on bulk payments this year. That'll be a real focus, and that'll start to flesh out discussions around bulk payment use cases."
That work is vital to ensuring a smooth, economy-wide transition from BECS. But we know that many bulk files actually hold quite small numbers of payments — maybe fewer than 10 in a file. So there's a real opportunity now for organisations to think about what their BECS exit journey looks like, and how they might make the most of the benefits of the NPP.
On that side of the equation, my colleague Chris Ponton Dwyer highlights six things that payments-focused organisations need to consider on the run to 2030 in this article. It's well worth a read.
Australian payments are undergoing once-in-a-generation reform and modernisation.
The early adopters are already integrating with Australia's world-class, real-time payments infrastructure.
Tomorrow's payments are available today.
Everyone's going to have to make a BECSit by 2030. The question is: how graceful will yours be?
In late 2023, the Governor of the Reserve Bank of Australia — Michele Bullock — delivered the Annual Payments Address at the Australian Payments Network Summit. Governor Bullock described the Payments System Board’s strategic priorities, and drew a 2030 line-in-the-sand for Australia's legacy BECS framework. As Chris Ponton Dwyer says, the payments modernisation starter's pistol has been fired.
Read more
On 8 December 2023, Treasury released its second consultation paper on payments licensing reform which contains the details of a proposed licensing regime for payments service providers (PSPs). As our Public Policy Lead — Gabe Perrottet — reports, Zepto's public policy advocacy is having a real impact on the future of payments regulation in Australia.
Read more