The New Payments Platform (NPP) has launched in Australia, allowing business operators using accounts from a number of financial institutions to instantly send and receive payment transfers, but experts have stressed the need for users to be wary of the risks.
Launched on Tuesday, the NPP will allow customers of up to 60 financial institutions, including National Australia Bank, Westpac and Commonwealth Bank, to send and receive payments between participating banks instantly
More providers are expected to come on board as the platform rolls out. It will also allow eligible users to link their bank details to a PayID, which means users can hand out their phone number or email address to receive payments instead of numerical bank account details.
According to a Reserve Bank of Australia 2012 review into Australian payment systems, instant bank transfers have the potential improve cash flow for businesses and relieve the potential strain of delayed invoices payments.
However, in The Conversation, Steve Worthington, an adjunct professor from Swinburne University of Technology, highlights that because bank transfers will no longer have a buffer period of two to three days before a payment is cleared, banks will now have to detect fraudulent activity in real time.
“Payments on the New Payments Platform may be faster and easier to make, but will they be safer? It could just make fraud faster and easier for fraudsters, and harder to undo for victims,” he argues.
Similar payments technology is currently being used in the UK under the name Faster Payments, which Worthington said is “rife with fraud and scams” — and the ability for real time payments in Australia could lend itself to the same risks.
“Part of the problem in the UK is that banks have trouble identifying potentially fraudulent transactions,” he said.
In January 2017, Albert van Wyk, the head of fraud at information agency Experian, told Fairfax he expects hackers will be upping their games to take advantage of technology that allows money to be in the scammer’s pocket immediately.
“As we move closer to NPP I am expecting a considerable amount of additional emails, texts, phone calls to be launched at consumers to try to gain access to their information,” he said.
“I think the implementation of a real-time payment environment will definitely lead to increases in opportunity for fraudsters to gain access to money, in a much faster way than what they ever have.”
According to NPP Australia, before any financial institutions were able to access NPP infrastructure, they had to first ensure their security measures were capable of detecting fraud in real time.
A spokeperson for NPP Australia tells SmartCompany the platform was built “with security and fraud front in mind”.
“Consumers should continue to be mindful of scams, where someone tries to trick them into authorising a payment or providing their bank login credentials to a fraudster,” they said.
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“Just as people do today, consumers should never give their login passwords to anyone, even people claiming to be from your bank via email or phone.”
SMEs need to double-check where the money is going
David Markus, founder of business IT firm Combo, says the onus is now on small businesses to ensure all payments are being sent to the correct location. Markus points out cases before the NPP was implemented in which hackers accessed business accounts and changed the details of invoices to redirect payments into false bank accounts.
“The key precaution is do not change the funds recipient details without confirming it with an inbound call to their accounts department. It comes down to accounts department policies checking where they’re transferring money to is the right place,” he tells SmartCompany.
Markus believes the NPP is a beneficial piece of technology that removes anxieties around delayed payments.
“With [NPP], when someone says ‘I’ll pay you today’, you can call back the next day and tell them you didn’t receive the payment and have a conversation about what went wrong,” he says.
“It removes a whole lot of doubt for busineses and reduces a lot of time businesses spend following up payments.”