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New Payment Platform - Australia's transformational journey to cashless society

Payments Industry is undergoing disruptive change over the last few years. And this change will continue for foreseeable future. Digital payments are rapidly replacing currency as the primary instrument for payment transactions. With the increased accessibility, affordability and reliability of technology, cash-less society is turning out to be a reality. While cash still remains 'king', newer and better payment instruments are changing the customer behavior rapidly.

There are three 'C's which are critical for any good payment instrument. And in comparison to cash as payment instrument, Digital Payments are showing better performance on these three 'C's. They are:

1. Confidence: The instrument has to be 'trusted' by the transacting parties; ensuring soundness of digital payments including availability, security and reliability.

2. Convenience: The instrument has to be easy and quick to use. While societies find cash as a 'convenient' instrument, modern technologies using mobile phones, contact less cards, wearable devices etc. are turning out to be much more convenient than cash.

3. Cost-effectiveness: Handling cash is costly as it involves printing, logistics, distribution, processing etc. The digital payments can provide much better economy of scale.

Considering these imperatives and industry trends, Reserve Bank of Australia (RBA) started an initiative called New Payments Platform to propel Australian market into such cash-less world. In 2014, thirteen financial institutions, including the Big 4 banks in Australia, signed up to build the New Payment Platform (NPP). Accordingly, Industry Consortium was created to govern the program under the leadership of RBA. This Consortium has representation from all the thirteen financial institutions.

NPP provides basic payment infrastructure which offers following key capabilities to retail and business consumers in Australia:

1. Near real time payments - Payments can be made from one party to another almost instantaneously, including settlement. Within a matter of few seconds, funds will be transferred and made available for payee to use.

2. 24X7 availability - The infrastructure is always-on. The platform is designed to be made available for 99.995% of the time. It means a maximum down-time of 2 min/month. Besides, there would be zero data loss for the transactions during any outage.

3. Data-rich - The global ISO20022 messaging standard is used to provide ability to send more complete remittance information along with a payment transaction.

4. Simple Addressing - The centralized addressing service enables retail payments by way of using an identifier like phone number or email ID or an organizational identifier. There is no need to use complex account codes and branch codes of the payee.

5. Versatile - NPP offers basic payments infrastructure on which financial institutions can build 'overlay' services looking at the specific needs of their clients. These overlay services can offer additional functionality to retail and business customers of financial institutions. In many ways, NPP is similar to operating system on a mobile phone, while overlay services are the apps built on the top of this operating system.

While smaller financial institutions have not signed up for NPP directly due to their inability to make upfront investments, they are expected to tie up with others to make use of the capabilities offered by NPP. This approach will ensure that entire Australia supports NPP covering each and every consumer.

The participating financial institutions see the initiative as an opportunity to create a futuristic payments platform that meets not only stringent NPP requirements; but also enables rapid adoption of overlay services. Some of them have a simplification roadmap to replace other digital payments platform with NPP.

In late 2015, Infosys was chosen as the System Integrator for one of the Big 4 banks in Australia. The payments business contributes 15% of the bank's revenue from the customer base of 3 Million. The bank believes that 50% of its payments business is at risk without NPP. Importantly, the bank sees NPP as a huge revenue generation opportunity through overlay services. It is also the largest investment initiative for the bank for FY2016 and FY2017.

The scope for Infosys includes technology architecture/design, requirements, development, infrastructure sizing/selection/build, integration across channels and back-end systems, testing and vendor management services. It is the largest 'turn-key' project for Infosys in the region and across FS business at the moment. Infosys has pushed its traditional boundaries and accepted stringent SLAs, liquidated damages and full responsibility for the work done by the product vendor. Infosys has set up an integrated team of 175+ professionals with participation from 10+ units (ADM, DCG, CIS, EAIS, IVS, Lodestone etc.). In addition, product vendor is also the key partner of Infosys in this journey. The valiant efforts put by this team for last 20+ months have brought us very close to the completion of the program. The bank acknowledges the contributions made by this team has already given an interim Engagement Level Feedback (ELF) of 6/7. The go-live is expected to happen before the end of 2017. The team is now busy giving a final push and take the platform to 'live'.

Once 'live', NPP is expected to alter the customer behavior like never before. As of now, 47% of payments in Australia happen using cash. Conservative estimates suggest that Australia will be a cash-free society by October 2027, while aggressive estimates suggest that this feat will be achieved by June-2022. When that happens, it is certain that NPP would have played a huge role in it. And Infosys can take pride in its contribution to this transformation!

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