The move towards phasing out BECS in favour of a more modern payments system such as the New Payments Platform is gaining traction. The next steps in this process and how the industry will get there was the working thesis of a panel discussion at yesterday's AusPayNet conference.
The panel convened some hours after the scathing assessement, in the morning session, by RBA assistant governor Brad Jones on industry preparations for the BECS transition.
Diane Shay from NAB, pointed out that Treasury's strategic plan for the payment system, released last year, includes payments modernisation as a priority. A target date of June 2030 for the decommissioning of the legacy BECS framework will drive focus on this remaining work
Earlier this year, a media release from Australian Payments Plus stated that more than one third of account-to-account payments are processed today using the NPP so the migration from BECS to NPP has been occurring for some time.
Sally Etherington, acting assistant secretary in the payments and financial innovation branch in the digital competition and payments division of the Australian Treasury agreed that the future of BECS is indeed on the line.
"It's important to have a modern payment system to support a modern and digitally enabled economy," she said. "In the plan, we set out we want our payments system to be safe, resilient, and encourage innovation, competition and productivity."
"The account-to-accounts space has a potential to really advance competition and innovation, and therefore productivity, in the payment system which will have on flows to the rest of the economy."
"The other reason that the government is really interested in this area is that we are a massive end user of the BECS payment rails. All our welfare payments go through the BECS system, our pensions go in through there. We pay all our staff – payroll and superannuation go through there.
"We also collect a lot of our tax through the BECS payment rails," Etherington said.
The transition will be quite sizable for the government.
Ellis Connolly, head of payments policy at the Reserve Bank of Australia, spoke about increased adoption of the New Payments Platform, and the need to phase out the "low-cost workhorse of the Australian payments system".
"It's 20th century technology. It has limitations that reflect the days when data transfer used to occur using magnetic tapes," Connolly said.
Some of these limitations listed by Connolly: "It's slow. Payments take hours, if not days to settle; and the data that can transfer with each payment is minimal – just 18 characters per payment."
"This leads to a lot more manual workarounds and makes it very hard to properly screen for financial crime," he said. "And the addressing system of BSBs and account numbers is clunky and it's risky."
However, there are no plans underway to change that aspect of the payments system.
"There are still a lot of people who use BSB and account numbers, and that will continue into the future," said Katrina Stuart, general manager business payments, Australian Payments Plus.
In contrast, the benefit of the NPP is not just about