By James Eyers Financial Review
The Reserve Bank said banks' complex technology systems and a lack of investment urgency resulted in slow rollout of real-time payments via the "new payments platform", which launched in February last year.
The "slow and uneven rollout of NPP services has been disappointing", the RBA said, urging banks to use the system for more transactions and make its data-rich features available to customers.
"Even where NPP services have been enabled, some major banks still have significant functionality gaps in terms of the ways that payments can be initiated or the limits that are placed on payment amounts," the central bank said in a conclusions paper released on Thursday.
"The slower-than-expected roll-outs by some participants appears to reflect the complexity of their systems and underestimation of the degree of investment needed to meet delivery time frames."
The system not only enables payments in real time, but should be allowing household, business and government customers to attach rich data to payments – such as that in a business invoice – to increase productivity. The system also allows third parties to initiate a payment, which the RBA said could substantially increase transaction volumes.
Following criticism from the Productivity Commission last year, the RBA reviewed access functionality and arrangements alongside the Australian Competition and Consumer Commission. It found NPP Australia's own governance systems were appropriate and not limiting access to the system.
The RBA has recommended the board of the NPAA, chaired by Bob McKinnon, to empower the NPP to mandate that specified, core capabilities "must be supported by participants within a specific period of time, with a sanctions regime to apply if participants do not comply". That could include fines or additional contributions to NPP, with powers similar to cred-card schemes, which can penalise members.
The move recognises a payments network requires all participants to adopt innovations for the benefits to be fully realised.
The RBA warned on Thursday if this was not enough, it would "consider the merits of a regulatory solution to ensure that NPP functionality meets the evolving needs of users of the payments system".
Some of the major banks are moving payments traditionally batched overnight via the direct entry system onto the NPP, and the RBA said if other banks did more of this, volume across the network would rise, bringing unit prices down.
The RBA action comes after assistant governor Michelle Bullock told the ASIC forum slow progress had made it hard to market the system to consumers or businesses.
The RBA said on Thursday it would conduct another review of NPP functionality and access issues, in conjunction with the ACCC, commencing no later than July 2021.