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NPP overlay services


This video gives a simple introduction to the overlay services which will accompany Australia’s New Payments Platform (NPP), explaining what they are, why they’re important and how they might benefit businesses and consumers.

While the NPP infrastructure will make real-time payments possible, what will really make the NPP come to life is the range of overlay services that will be built on top of it.

From day 1, the NPP’s first overlay service will allow:

  • People to make payments in close to real-time availability via mobile devices
  • Payments to be linked securely to documents (e.g. a remittance advice or tax statement)
  • People to request money from others (Payment requests)

In the future, the possibilities for overlay services are nearly limitless. They may be able to solve payments pain points like invoicing or buying or selling a second-hand car.

BPAY to offer NPP’s first overlay service

Blue and white BPAY logoAs we race towards the launch of the NPP, the Industry Program has reached another significant milestone.

It’s exciting to hear that BPAY is creating the first overlay service, the Initial Convenience Service (ICS), for Australia’s New Payments Platform.

Due to launch in 2017, the NPP will facilitate faster, richer, more versatile payments in Australia, 24/7. Cuscal is one of the 12 original participants that are the architects of the NPP and will mutually own its infrastructure. While the NPP’s basic infrastructure, currently being built by SWIFT, will allow better payment experiences to occur the overlay services will actually make them happen.

Getting the first overlay service right is important to the success of the NPP overall and I think BPAY’s expertise will help in a number of ways:

  • Trusted partner. The launch of the NPP is only two years away, so working with an established partner which is trusted by banks, businesses and consumers is essential to keep things running on time. BPAY’s experience in collaboratively promoting a payment solution with all Australian financial institutions will help us get the ICS to market more quickly and smoothly, with a greater chance of speedy take-up.
  • Experienced at influencing consumer habits. BPAY has already been successful at moving the payment of invoices and bills to internet and mobile banking. This experience will be very useful in helping people understand, and then adopt, new concepts like payment requests and immediate payments. BPAY’s expertise will be useful in designing a well-branded ICS which resonates with users as well as an effective strategy for customer experience and shared industry marketing.
  • Familiar rules. All Australian financial institutions are members of the BPAY scheme and are used to working within its rules to develop payment interfaces; this should alleviate some potential implementation challenges.

BPAY’s solution for the ICS is a practical and sensible approach which will deliver more than the NPP’s Basic Infrastructure is capable of, without trying to be all things to all people. It will help to prove the potential of the overlay model and demonstrate that solutions don’t all need to be highly technical to solve customer pain points and deliver value to both payers and payees.

The ICS also deliberately leaves gaps which can be filled by additional overlay services over time, incrementally adding extra functionality to the NPP. This will be good for competition and help meet the objectives set out in the Reserve Bank of Australia’s Strategic Review of Innovation in the Payments System (2012) that was the catalyst for the New Payments Platform.

The ICS is a straight-forward, low-cost solution which should ignite demand in the NPP – it’s a good choice for all of us.

Read more about the New Payments Platform, and Cuscal’s NPP Solution.

By Nathan Churchward, Senior Manager, Payment Products

Why you need to get ready for the NPP now

Multiple lines going in different directions and payment icons

With Australia’s New Payments Platform (NPP) still around two years from starting it would be easy to assume that financial institutions still have plenty of time to get ready, but the reality is that time is rapidly running out. Financial institutions that get ready now will receive clear economic benefits – those that don’t will miss out.

Why real time payments in Australia will boom
Unlike in some other countries, all of the right functionality will be in place for consumers to embrace the NPP immediately. From day one, the NPP will feature:

  • A centralised addressing service, allowing banking customers to use their mobile number or email address as an alias for their bank account details.
  • The first overlay service will have a common brand and broad industry-funded promotion. This will give all participating financial institutions a way to readily fulfil the promise of real-time payments for their customers.
  • Transaction by transaction settlement, which means that the NPP will be a true real-time payment system capable of offering nearly instantaneous payment processing and settlement.

Of course, for a faster payments system to take off quickly, the conditions also have to be right. For example, there needs to be a critical mass of early adopters who embrace new technology.

Australians fit the bill perfectly.

Not only do we have one of the highest levels of smartphone penetration in the world and the second highest in Asia, we’re also the leader when it comes to adopting mobile banking. Between 2013 and 2014 alone, for example, the use of mobile banking in Australia spiked by more than 70 percent. Today an estimated 38 percent of banking transactions are conducted via smart phones or tablets, a figure that’s only going to continue to grow in the coming years.
Plus, we like embracing new technology. Just look at how contactless payments have exploded here over the last couple of years. It’s proof that when a new payment mechanism is both convenient and broadly accepted, Australians will rapidly adopt it.

It’s time to get ready for the NPP, here’s how
Given that the NPP is likely to take off quickly after its launch in 2017, the time to start planning for it financially, resourcing it appropriately, and getting everything ready for implementation is now. Make no mistake, it’s going to be a lot of work. To be ready, you’ll need to:

  • Talk to your core and channel banking system providers and budget for implementation activity in 2016 and 2017
  • Update your core banking systems so they can integrate with NPP transactions
  • Update your mobile and Internet banking channels to accommodate the additional information that comes with NPP transactions and new transaction types like payment requests and payments with a linked document
  • Think about change management within your internal operations teams, training them along with sales and customer service teams
  • Talk to your legal department to update terms and conditions
  • Communicate with your customers so that they’re ready to use NPP style transactions within the Cuscal network in early 2017
  • Plan a robust marketing launch that leverages industry activity
  • Get your customers ready to use the NPP for real-time payments between their account and accounts at most Australian banks by late 2017

No one can deny this is a lot of work. For financial institutions with long planning cycles, it’s going to take at least 18 months, meaning that you need to start now to be ready in time.  But despite the effort it will take, there are clear economic benefits for early adopters, while stragglers will miss out.

  1. Positive brand boost
    The reality is that failing to embrace and get ready for the NPP just isn’t an option. For banking customers in today’s digital world, it’s almost like telling them the only way they can contact you is by fax. Any financial institution that doesn’t quickly adopt the NPP will be viewed as behind the times, not focused on their customers, and ultimately irrelevant. Just look at all the negative press Barclays garnered for not adopting the UK’s faster payments scheme at the same time as its competitors. Early adopters, on the other hand, will be viewed as modern, forward-looking financial institutions by their customers and competitors.
  2. Catch up to, or overtake, your competition
    The Big Four Banks currently have an advantage because of their large customer bases. So when they introduce innovations like payments to mobiles, or real-time payments to anyone that has an account with them, it’s much more useful than when a smaller financial institution offers the same service.However, if you link to the NPP your customers will be able to make real-time payments, straight to mobile, to anyone with an NPP-linked account at any NPP-ready financial institution. This will give you the chance to both level the playing field with the big banks while also leapfrogging any of your competitors that are slower to adapt.
  3. Claim your share of a major new payment stream
    What makes things particularly urgent is that when the NPP starts, customers’ mobile phone numbers will only ever be able to be registered as an NPP alias with one financial institution at a time. This means that if your customers don’t register their mobile number with you as an NPP alias they may never use you for instantaneous payments. So if you’re not ready for the NPP when it launches, you may miss out on the majority of income from this payment stream for a long time to come.

The bottom line is that the NPP is rapidly approaching and its adoption by Australian consumers is likely to be quick and widespread. As a financial institution, getting ready for the NPP is a significant piece of work that can’t be accomplished overnight.

With only two years to go, the time to start preparing for the NPP is now. Those who do will reap the benefits. Those who sit back, planning to be ‘fast followers’, will discover they’ve made a serious mistake.

Why ATMs need to evolve to avoid extinction

male withdrawing cash

When Charles Darwin developed his theories on evolution and natural selection, he probably didn’t imagine that they would one day be applied to aspects of life outside the natural world. Yet the reality is that just like living creatures, man-made devices often need to evolve to survive. That’s certainly true of Australia’s ATMs. Although our nation’s cash-dispensing machines have remained largely the same throughout their history, in today’s increasingly competitive environment they need to change to stay relevant. In fact, unless they evolve into more sophisticated and useful devices, their survival could be at stake.

Back in 1977 when the first ATM was installed in Australia at the Queensland Teachers’ Credit Union in Brisbane, its purpose was as straightforward as it was singular. Just like the tens of thousands of machines that would eventually follow it, it was designed to dispense cash, thus giving customers an alternative to visiting their bank’s local branch to withdraw funds. In the years since, the number of ATMs across Australia has steadily risen, and today there are more than 31,500 terminals across the country.

Yet despite their proliferation, in recent years new “predators” have arrived on the scene that have rendered traditional ATMs less useful and thus threatened their existence. These days, for example, thanks to the rise of contactless transactions it’s easier than ever to make purchases without cash. And, when you do need or want cash, you no longer have to rely on ATMs or in-person visits to your bank to get it. Instead, you can now readily get cash back as part of your transactions at your regular grocery store or service station.

Not surprisingly, conveniences like these have led to a decline in the use of traditional ATMs. In fact, withdrawals from ATMs are currently at their lowest level in a decade, with less than 60 million transactions per month.  At the same time, however, the costs associated with running ATM networks continue to rise. Plus, the revenue streams they create are now just a fraction of what they were prior to the 2009 legislation that introduced direct charging.

Faced with challenges like these, it would be easy to conclude that ATMs are on the verge of going extinct. The reality, however, is that much like cash, Australia’s ATMs aren’t going away any time soon because they remain a critical part of our banking system. That said, however, you can and should expect to see traditional ATMs giving way to a new generation of machines with the increased security and functionality they need to stay relevant in today’s rapidly evolving banking environment.

The future of ATMs
For ATMs to continue to play an important role in banking, they need to be capable of more than just the withdrawals they handle today. In fact, they need to offer a new array of functionality that helps to ensure that they’re not only compliant and secure, but that they are also far more useful and convenient for customers. For example, the next generation of ATMs needs to offer functionality such as:

  • Intelligent deposits that allow customers to make cash and cheque deposits that are otherwise only possible by visiting a teller.
  • Favorites that keep track of customers’ preferred transactions (e.g. withdraw $100 from savings, print a receipt) and make them available as default services that can be accessed at the click of a button.
  • Nearest ATM capabilities that show customers where the next closest ATM is located if their normal ATM breaks down.
  • Contactless and cardless transactions that create a more efficient, hassle-free customer experience and are aligned with the growth of mobile banking.
  • The ability to have receipts e-mailed to you rather than having them printed out.
  • Foreign language capabilities so that customers can interact with the ATM in their native language.

As a financial institution, the bottom line is that for your ATMs to survive and remain a source of revenue, they need to evolve from traditional cash-dispensing machines into multi-functional, self-service portals that customers can use to meet a much wider array of their banking needs.

Sharing the load
As ATM usage continues to decline and the cost of providing an evolved, fully-featured ATM increases margins will grow ever tighter and more and more financial institutions will question the financial viability of running their own ATM networks. This is likely to result in financial institutions being more willing to ‘share’ their ATM networks with each other. These shared networks will make ‘hard branding’ of physical ATMs (colour schemes and logos) more difficult but they will be able to overcome this with ‘softer branding’ through personalised digital experiences when customers identify themselves. Networks like the rediATM scheme were created to fill this need.

An evolutionary advantage
For today’s financial institutions, there’s an economic benefit to be gained by installing smarter ATMs. By reducing the frequency at which customers need to visit tellers for basic transactions, for example, these institutions can reduce staff. Alternatively, they can ensure that their staff spend more of their time engaged in higher value transactions, including cross-selling other products.

While foot traffic will always remain important to some financial institutions, allowing staff to dedicate more time adding value to their customers’ banking experience is a goal that every financial institution has in common. Embracing the evolution of ATMs into smarter and more helpful devices can be an important step towards making that happen.

Cuscal set for early adoption of Apple Pay solution

group meeting

Cuscal is excited about the announcement from Apple today that it will support payments in its new iPhone 6, together with iOS8 and has called it Apple Pay.

Adrian Lovney, General Manager, Products and Services believes that Cuscal is in a prime position for early adoption to the new Apple Pay solution.

“With Cuscal’s work to date regarding tokenisation we can leverage the ongoing development of our HCE app, previously only available for Android devices,” said Adrian.

“This ensures that we are in a key industry position for early adoption to the new Apple Pay solution. As you might expect, Apple’s announcement positions themselves as the gatekeeper to the Apple ecosystem (unlike the Android HCE approach which is more open).”

Apple has announced that as part of iPhone 6 they will be launching their NFC enabled mobile payments service (Apple Pay) in partnership with the key schemes, specifically Mastercard, Visa and Amex as well as initially the top six issuers in the USA, covering 83% of cardholders. This includes tokenisation through the schemes and a secure element embedded in the phone itself. Substantial hardware upgrades of existing iPhones to the iPhone 6 will be required before Apple Pay is widespread, however with the launch of Apple Watch also incorporating NFC capabilities in 2015 we understand that this will bring NFC capability to the current iPhone 5 and iPhone 5c.

The device will have preloaded applets for each of the schemes, which Apple will provision secure credentials directly into the embedded element from iTunes or add new by taking a photo from the iSight camera.

Adrian continued that “While Apple has clearly indicated their intent to launch this in the USA in the first instance we anticipate that Australia will be a focus as a fast follower to this initial roll-out. As Australia has one of the highest rates of contactless availability Cuscal is excited to welcome the new Apple capability and provide our clients with a quick-to-market solution ready for the Australian Apple launch.”

“When we can we will incorporate this functionality within Cuscal’s payment platform, as well as within Cuscal’s mobile banking and payment suite.

“As a major Australian issuer we intend to be on the frontline of this exciting new development by Apple, allowing our clients to continue to be at the forefront of mobile payments.

“We believe that a combination of Apple’s NFC based solution and Cuscal’s HCE offering will finally bring an end to the Secure Element (SE) wars and allow consumers to access NFC payments on the device of their choice at an affordable price point,” he concluded.

Cuscal begins national rediATM fleet refresh

A man using a rediATM

Next generation rediATMs offer extensive withdraw and self-service functionality

Sydney, 25 June 2014: End to end payments leader Cuscal has commenced of a national refresh of Cuscal-owned rediATM machines. The combined $17 million software and hardware upgrade, which will be completed by June 2015, will replace Cuscal’s existing fleet with 1,200 next generation rediATMs that will provide scheme participants and their cardholders with extensive future ready withdrawal and self-service functionality.

The new rediATM roll-out follows the recent transition of all Cuscal driven rediATMs to the Windows 7 operating system and the successful completion of a public pilot of other new rediATM software capabilities at select locations in Sydney.

“After approximately eight months of build, test and certification we are now ready to publicly roll-out our new ATM software and hardware,” said Adrian Lovney, General Manager: Product and Service, Cuscal.

Future ready capabilities already built into the new ATMs include Near Field Communication (NFC) readers for mobile payments, bar code readers, as well as cash and cheque deposit with real time credit.
Cuscal’s new software platform will also significantly advance the functionality of the new rediATMs and better represent rediATM scheme participants to their cardholders through a more personalised and tailored service.

“This phased approach will introduce new functionality such as favourite transactions, issuer branding and issuer advertising to our network and also sets the framework for many new features and enhancements to be built and deployed over coming years,” said Mr. Lovney. “As other networks show signs of consolidation, the new rediATM network will enable our members to provide an advanced withdrawal and self-service channel that puts them on a par with Australia’s bigger financial networks at a fraction of the investment required for an ATM network this size.”

This announcement also closely follows the news that Cuscal has formed an ATM access partnership UnionPay, China’s largest card scheme with over 4.2 billion cards on issue. UnionPay cardholders who visit Australia from April onwards are already able to draw cash from approximately 2,500 of the rediATM branded machines operated by Cuscal and the National Australia Bank.

Adopting a philosophy of partnering and never competing with clients, Cuscal is the ‘brand behind the brand’ to many organisations which require safe, innovative payment options for cost-effective transactional banking services.

About rediATM
The rediATM network is one of Australia’s largest ATM networks. With over 3,000 rediATMs across Australia, it partners with over 100 financial institutions including credit unions, building societies and banks.

The rediATM network provides direct charge free access to over 8 million Australian cardholders.

Cuscal launch first HCE mobile payment trial

BiscuitCuscal’s mobile contactless payment solution enables quick and seamless provisioning – an Australian first delivering tomorrow’s world today

Sydney, 27 March 2014: End-to-end payments leader Cuscal has today announced the launch of the first trial of a HCE (Host Card Emulation)-based mobile payment capability, for Visa cardholders, in Australia and the Asia-Pacific.

The future-ready solution has been developed by Cuscal in Sydney and when launched commercially, will provide Australian consumers with greater choice when it comes to making secure payments with their mobile phones.

The Cuscal HCE mobile payment solution effectively turns an NFC-enabled phone running the latest version of the Android KitKat mobile operating system into a contactless payment device. With confidential payments data1 stored in a secure cloud, it provides a strong level of security.

When commercially available, the solution will enable Visa cardholders whose cards are issued by one of Cuscal’s financial institution clients to use their mobile phone to make contactless payments via existing Visa payWave contactless point-of-sale terminals that are widely available in Australia. Sensitive payments data is stored in Cuscal’s secure cloud service which the mobile phone connects with via the cellular network.

A pilot team of Cuscal staff cardholders have begun testing the HCE capability over the last week. Following the successful completion of the trial, Cuscal aims to make the solution available to its Australian client base in the middle of this year as part of its broad suite of mobility services; either as a complete client-branded mobile application, or via an application programming interface (API).

This will allow Cuscal clients to offer innovative mobile payment solutions to their customers, while minimising upfront development costs by leveraging this secure and cost-effective solution.

Adrian Lovney, General Manager of Product & Service at Cuscal, said: “Cuscal’s HCE mobile payments solution is a shining example of Australian innovation delivering tomorrow’s world today. Getting payments inside phones has traditionally been difficult because of the need to coordinate multiple parties such as trusted service managers, handset manufacturers and telecommunication providers. The HCE approach simplifies this while maintaining the highest level of payment security for cardholders.

“A level of openness will be built into Cuscal’s foundation mobile application offering, so we can continue to develop the HCE mobile payment solution in line with partner demand and device innovation as well as ensure that it can be integrated with the New Payments Platform (NPP) when it is ready,” he said.

Stephen Karpin, Group Country Manager for Visa in Australia, New Zealand and South Pacific said: “Australia is again leading the charge in payments innovation and we are delighted to work with Cuscal on this trial to help make next generation commerce a reality. With 40% of face to face Visa transactions in Australia already taking place via the Visa payWave contactless technology, it is important to develop the infrastructure to deliver secure mobile payments to the consumer.”

Jason Murray, General Manager Products & Marketing, CUA, said: “It’s exciting that our key payments partner is developing cutting edge mobile payments infrastructure, which we at CUA will be able to leverage for the benefit of our customers in the future.”
Brian Parker, Cuscal’s Chief Information Officer, was the first person to perform a live HCE-based Visa payWave transaction using the new solution with the purchase of two packets of Tim Tams at a 7 Eleven in Sydney’s CBD on 17 March 2014.

Mr. Parker says Google’s Android KitKat operating system, combined with the security of Cuscal’s cloud service and Visa’s network, will provide clients with the highest level of assurance around security whilst being able to access future mobile payments technology and reducing the impact of upfront development costs.

“Increasingly, NFC technology is being developed in the cloud and maintained by trusted technology providers; this is the future of payments,” said Mr. Parker. “Importantly this solution is provisioned securely with multiple layers of protection built-in.”

“Cuscal’s client-branded mobile payments solution, incorporating HCE, will be refreshed and updated on a continual basis to accommodate new functionality in line with device evolution, industry innovation, new payment channels, market demand and innovation within our own ATM, payments and switching environment. We also plan to make HCE payments capability available to our clients via an API.”

Additional points:

  1. The Cuscal-Visa HCE mobile payments capability must first be downloaded by the Visa cardholder to a compatible Google Android device (Nexus 5, Nexus 7, and newer HTC and Samsung smartphones, among others).
  2. Recent research from Telsyte shows that of the 15 million smartphone users in Australia at the end of 2013, Android leads the way, with slightly over 50 percent of the market.
  3. The customer can then wave their mobile phone over secure, contactless point-of-sale terminals in order to make payments and should look out for the contactless symbol at the payment terminal.
    The application and phone pass a series of messages between the phone and Cuscal’s servers, either authorising or declining the transaction.
  4. Like others processed by Cuscal, these transactions are protected by Cuscal’s Vigil fraud bureau service, an industry-leading fraud prevention and protection suite, which has more than two million cards under management.

1 Such as encryption keys, card numbers or PINs.