Ever wondered what happens to your funds that are tied up between you paying an account and the funds being available to your supplier?
One thing is for sure, the money is lost to our economy for a few days. If all payments were available to the recipient in real time the economy would benefit significantly from the extra cash that would be available.
Fast Retail Payment Systems, where payments are made as cleared funds in real time, have been available in many overseas banking systems since the early 1990s.
Finally, such a system is coming our way.
Australia has long had a real time payment system, known as RTGS (Real Time Gross Settlement).
However, this system is expensive and is designed for a low volume of larger payments - it is not suited to large volumes of both small and large payments.
Late last year (December 2 2014) a consortium of Australian banks committed to funding and building a fast retail payment system.
The system, known as the New Payments Platform (NPP), has the ability to make payments with cleared funds available in real time.
The system will be available 24/7 for both consumer and business payments. It is expected to be operational in 2017.
The NPP will not only allow real time cleared funds, it will also link to an enhanced Reserve Bank of Australia clearing system that allows banks to clear in real time rather than overnight.
Further goodies will come with this new system. One of the shortcomings of the current Australian payment system is that it allows very little information to be sent along with the payment.
The NPP will take advantage of recent technology advances and allow a significant amount of data to be transmitted with the payment, including a detailed remittance advice.
A further feature of the NPP is that it will be able to utilised using a mobile phone where the recipient's identifier could be their mobile number or an email address, thus eliminating the need to remember BSB and account numbers.
For factoring companies such as FactorONE, this will allow us to further enhance our clients' cashflow and gain real efficiencies from being able to upload remittance details directly from the banks into our factoring system.
Roll on 2017!
