Bob Masina General Manager, Technology & Operations, New Payments Platform Australia
New Payments Platform A Technical Overview
NPPA Webinar
14 September 2017
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Today’s Webinar
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Will be a technical overview of how the New Payments Platform works, covering:
• The architecture of the platform
• The NPP message set
• How Overlay Services will work
• Questions
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Where are we in the journey?
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June 2012RBA’s Strategic Review on Innovation in the Payments System
Feb 2013Real Time Payments Committee Proposed Way Forward
June 2013New Payments Platform Programme created
Q4 2017New Payments Platform –Open for Progress
Dec 2014NPP Australia Limited established
2017Participant and Industry Testing
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How does the NPP work?
Connection to the NPP Basic Infrastructure and Addressing Service is via NPPA/SWIFT-supplied Payment Gateways (PAGs)
The NPP PAGs are configured to support processing and routing of transactions between PAGs, the Addressing Service and the RBA’s Fast Settlement Service
The NPP uses ISO 20022, the global standard for electronic data interchange between financial institutions
Overlay Services can sit on top of the Basic Infrastructure to offer different customer value propositions and experiences
NPP Regulations and Procedures define technical, operational and security requirements and liability for fraud, Misdirected Payments, Mistaken Payments and Error Payments
Bank Channels
Payment Gateway
Payer
Addressing Service
NPP Participants (Financial Institutions)
Fast Settlement Service
Reserve Bank Information and
Transfer Service (RITS)
Reserve Bank of Australia
Clearing Request and Notification
Settlement Notification
Payment Gateway
Bank Channels
NPP Participants (Financial Institutions)
Payee Settlement Notification
Settlement Request
Payment Gateway
Overlay Services
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What is PayID?
• A core, customer facing component of the NPP which is both -
− an access controlled, secure repository of encrypted customer account information
− an addressing service which enables Payer Participants to create clearing messages at Payer’s request using Payee’s easy to remember account proxy
• Four alias types will be available initially – phone, email, ABN/business numbers and organisation identifier
• Customers will register PayIDs in the Addressing Service via their financial institutions (privacy consents will be in place)
• Registering financial institution responsible for effective, correct, authenticated registration
• A PayID can be moved easily between accounts and between financial institutions
• Payments can be initiated to a PayID or to account details (BSB/account number)
• If a payment is PayID initiated, the Payer will be able to check the PayID Name linked to the PayID and the account before authorising the payment
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ISO20022 Messaging
Global Interoperability
Rich Data Remittance
Uniform and reusable messages
All NPP messages are in the ISO20022 message standard. ISO20022 is a standard for financial messaging using XML syntax. ISO20022 provides a flexible framework to build business transactions by opting for a single, common "language" for all communications as well as the carriage of additional information with a payment.
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NPP Message Types
Function Message Type Name
head.001.001.01 Business Application Header
pacs.002.001.06 FI to FI Payment Status Report
pacs.008.001.05 FI to FI Customer Credit Transfer
pacs.004.001.05 Payment Return
pacs.009.001.05 Financial Institution Credit Transfer
camt.052.001.05 Bank to Customer Account Report
pain.001.001.06 Customer Credit Transfer Initiation
pain.002.001.06 Customer Payment Status Report
pain.013.001.04 Creditor Payment Activation Request
pain.014.001.04 Creditor Payment Activation Request Status Report
camt.029.001.05 Resolution of Investigation
camt.030.001.04 Notification of Case Assignment
camt.035.001.03 Proprietary Formal Investigation
camt.056.001.04 FI to FI Payment Cancellation Request
FI = Financial Institution
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NPP Message Types – Clearing & Settlement Messages
Branch
Mobile
Phone
Internet
Service
Application
Payment Gateway
(PAG)
Payer Customer
Addressing Service
Payment Gateway (PAG)
RBA Fast Settlement
Service
PACS.008
Clearing
Settlement
Payer Customer Bank
Branch
Mobile
Phone
Internet
Service
Application
Payment Gateway
(PAG)
Payee Customer
Payee Customer Bank
pacs – Payments Clearing and Settlementcamt – Cash Management
1. Payer initiates a payment via a bank channel (i.e. mobile)
2. Payer’s FI can make use of the NPP Addressing service (PayID) in the event the payee uses a PayID
3. Payer’s FI sends a pacs.008 to the payee’s FI4. Payee’s FI clears the payment and responds
to Payer’s FI with pacs.002 as confirmation the payee’s account is able to be credited
5. Payer’s FI initiates settlement by sending pacs.009 to RBA. RBA transfers the value between the two FIs in real-time
6. RBA sends pacs.002 as a settlement confirmation to both FIs
7. Payee’s FI credits Payee subject to specific overlay requirements
8. Individual FIs may optionally have a camt.052 sent from the RBA for periodic balance report
Inside Basic Infrastructure (BI)
PACS.002
PACS.002 PACS.002
PACS.009
CAMT.052CAMT.052
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What is a Payment Initiation (PAIN) message?
Payment Initiation Authorisation Clearing Settlement Post-Payment Fulfillment
PACS message:
• Credit payment message
• Message for a payment to be cleared and settled
• Results in the actual movement of funds between accounts
• Is the responsibility of NPP Participants to execute
PAIN message:
• A non-value message seeking initiation of a payment message
• Requires authorisation by the account holder prior to clearing message creation
• Can be sent but there is no requirement for the receiver to action (this is where the Overlay Service Provider would define how it is treated)
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How can PAIN messages be used?
End User? Submitted to BI via? How authorised by Account Holder?
• End customer
• Participant
• Corporate
• Fintech
• Agent/service provider
• Merchant
• Participants
• Identified Institutions
• Connected Institutions and Connected Overlay Service Providers (via own PAG)
The PAIN must be authorised for the payment to be actioned. This can be done (implicitly or explicitly) by mechanisms such as:
• Account holder approval on a transaction by transaction basis (e.g. “pop-up screen”)
• Mandate process (typically used by merchants)
− One off, rules based
− Standing/recurring
• Transaction Negotiation Authority (TNA) standing authorisation (agent/service provider/bureau)
• Corporate commercial relationship
PAIN messages can be used in a variety of ways and to suit a different range of use cases
End users can submit PAIN messages to the NPP Basic Infrastructure in different ways
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NPP Message Types – PAIN Messages
Bank Channels
Payment Gateway
(PAG)
Addressing Service
Payment Gateway (PAG)
RBA Fast Settlement Service
Clearing
Settlement
Inside Basic Infrastructure (BI)
pain – Payment Initiation
1. Organisation sends pain.001 to FI 2. Organisation’s FI can make use of the
NPP Addressing service (PayID) in the event the payee uses a PayID
3. Organisation’s FI sends a pacs.008 to the payee’s FI
4. Payee’s FI clears the payment and responds to Organisation’s FI with pacs.002 as confirmation the payee’s account is able to be credited
5. Organisation’s FI initiates settlement by sending pacs.009 to RBA. RBA transfers the value between the two FIs in real-time
6. RBA sends pacs.002 as a settlement confirmation to both FIs
7. Payee’s FI credits Payee subject to specific overlay requirements
Payment Initiation
Bank Channels
Payment Gateway
(PAG)
PAIN.001
PAIN.002
PACS.008
PACS.002
PACS.002 PACS.002
PACS.009
Organisation
Payees
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NPP Message Types – NPP Investigations
Back Office Processing
Payment Gateway
(PAG)
Addressing Service
Payment Gateway (PAG)
RBA Fast Settlement
Service
Investigation
Back Office Processing
Payment Gateway
(PAG)
Inside Basic Infrastructure (BI)
camt – Cash Management
1. Financial Institution A advises Financial Institution B of formal investigation by sending camt.035
2. Financial Institution B sends camt.029 to Financial Institution A once investigation has been resolved
CAMT.035
CAMT.029
Financial Institution A Financial Institution B
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NPP Message Usage Framework
Overlay Service Providers can build upon the foundation layers of ISO 20022 NPP message usage to develop new innovative services
Example: Osko & pacs.008
ISO 20022 Schema: Unstructured Remittance Information – limited to
2 x 140 characters
Related Remittance Information - to carry the URL of an externally hosted document
ISO 20022 Schema
Foundation LayerNPP Core Elements(cannot be altered)
Innovation Layer (Available for
Future Overlays to Define)
New Payments Platform
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How does an Overlay Service work?
Overlay Service Provider defines the message set and data content to be used and how the flows will work (could be simply rules based or could involve a change to the current message set)
Service is offered to Participants and their customers
Once approved by NPPA, overlay service will be added to a closed user group with those Participants who choose to subscribe to the service
Overlay Service Provider manages ongoing governance and membership of service
Can be connected or non-connected to the Basic Infrastructure
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NPP’s First Overlay Service
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NPP Overlay Service – Osko by BPAY
Branch
Mobile
Phone
Internet
Service
Application
Payment Gateway
(PAG)
Payer Customer
Addressing Service
Payment Gateway (PAG)
RBA Fast Settlement
Service
Clearing
Settlement
Payer Customer Bank
Branch
Mobile
Phone
Internet
Service
Application
Payment Gateway
(PAG)
Payee Customer
Payee Customer Bank
• Quicker moving money – funds received in less than 1 minute
• More ways to address a bank account – no need for account details when using PayID
• Easier messaging – more explanation with up to 280 characters or a document url
• Ability to request to be paid – simple requests with up to 280 characters using PayID
• Confidence in Delivery – customer can receive immediate confirmation
• Through your FI – Osko will be in the majority of FIs mobile and internet banking platforms
• Easy to track if requests have been paid – easily track and reconcile which payment requests have been paid in full or part
• Confidence in who you’re paying or sending a request to – PayID name is displayed to confirm intended recipient
Inside Basic Infrastructure (BI)
PACS.008
PACS.002
PACS.002 PACS.002
PACS.009
CAMT.052CAMT.052
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Osko by BPAY Customer Journey: Making a Payment
Eva wants to make a payment to Company ABC of $250
Eva logs into her FI’s mobile banking app or internet banking
Eva enters Company ABC’s PayID to direct the payment.
Eva’s FI sends a request to PayID to retrieve the account details
Company ABC has $250 deposited into their bank account and the funds are available for immediate use
Bank Logo
Log in
Eva selects Osko as her preferred payment channel and enters details required for a payment
Bank Logo
The payment is sent via the NPP to Company ABC’s bank account.
Eva receives a confirmation that the payment was successful
Enter PayID:
0411 222 333
PayID name: Company
ABC
A short name may be returned to help Eva confirm she has the correct recipient.
Eva confirms and makes the payment
Confirm
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Examples
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Example 1: Payroll files (outside of the BI)
Corporate Customer Payroll File – Salary
Payments
Payer Customer Bank
Clearing using NPP pacs.008
FI’s with Payee Accounts
Payment Gateway
(PAG)
Payee Customer Bank
Payee Customer
Payee Customer
Payee Customer
Payee Customer
Payroll file pain.001
Within NPP Basic Infrastructure
Could either be independent of an overlay or part of an overlay
Payment Gateway
(PAG)
Payee Customer Bank
Payment Gateway
(PAG)
Payee Customer Bank
Payee Customer
or Overlay defined pacs.008
ConfirmationEnd Customer Authorisation
Payment Gateway
(PAG)
Bank Channels
• Payment initiation messages could be sent from third parties, containing structured payroll data elements, e.g. Employer ID, Gross Income, Tax withheld etc.
• These structured data elements are carried through into the Clearing message or referenced via a url to an external data source if using an Overlay Service
• Payments can be cleared and settled in close to real-time, 24x7
• Payee Customer would receive both the payment data and payment linked together (if using an Overlay Service)
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Example 2: Connected Overlay Service – Payroll
FI’s with Payee Accounts
Payment Gateway
(PAG)
Payee Customer Bank
Payee Customer
Payee Customer
Payee Customer
Payee CustomerOverlay pain.001
Within NPP Basic Infrastructure
Payment Gateway
(PAG)
Payee Customer Bank
Payment Gateway
(PAG)
Payee Customer Bank
Payee Customer
Connected Overlay Payroll Bureau with own PAG
Payment Gateway
(PAG)
Payment Gateway
(PAG)
Payer Customer Bank
FI’s with Payer Accounts
Payment Gateway
(PAG)
Payer Customer Bank
Payment Gateway
(PAG)
Payer Customer Bank
Clearing using overlay defined pacs.008
End Customer Authorisation
Confirm
• Payment initiation messages sent directly to Overlay subscribed NPP Participants, containing structured payroll data elements, e.g. Employer ID, Gross Income, Tax withheld etc.
• These structured data elements are carried through into the Clearing message or referenced via a url to an external data source
• Payments can be cleared and settled in close to real-time, 24x7
• Payee Customer would receive both the payment data and payment linked together
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New Payments Platform – Key Takeaways
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Available 24 / 7 / 365
Will be world-class using ISO20022 messaging
Data and payment travel the NPP together
Ability to use PayID instead of remembering my BSB and Account number
Real-time clearing and settlement
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Questions
Thank you
©2017 NPP Australia Limited (ABN 68 601 428 737)Disclaimer: This presentation is for general information purposes only. Neither this presentation, nor any information contained in it, shall form the basis of any contract between NPP Australia Limited and any person, nor constitute a commitment by NPP Australia Limited to any person.© NPP Australia Limited
For more information please contact the NPPA team on [email protected]