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The New Payments Platform and Superannuation: a revolution in efficiency

The New Payments Platform and Superannuation

The New Payments Platform (NPP) offers the superannuation industry great potential to facilitate faster payments for the benefits of members and business and corporate customers. However, it will take innovation and collaboration to seize the opportunities. In this first report, KPMG in partnership with Commonwealth Bank of Australia explore the current complications, potential benefits for employers, funds and members and the opportunities to innovate from the NPP in the superannuation industry.

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Key payments in superannuation comprise contributions to funds from employers, top-up contributions by members, and payouts by the funds – in cash to members or, more commonly, transfers to other funds. Unfortunately, the current lag between payment initiation and completion is between one and three days – which is hitting fund members in their wallets.

The NPP is set to completely revolutionise how Australian payments are facilitated, with data rich, near real-time transactions, 24/7. The NPP promises to boost payment efficiency for businesses, organisations, governments and consumers, cutting out administration complexities and reducing cash flow issues.

The four unique features of the NPP:

  • Ubiquitous near real-time payment: This occurs irrespective of which organisation a customer banks with, within 15 to 20 seconds.
  • Pay ID: This replaces a BSB and account number in a payment, and can be a mobile number, email address, ABN or business name.
  • Data travels with the payment: Rather than sending, for example, a remittance advice via email, it can be sent with the payment. The NPP also provides the payer with more details about the receiver for increased accuracy. 
  • Always available: Payments can be made all day, every day, including weekends and public holidays. Banking cut-off times will be a thing of the past.

Current complications for super funds

Australia’s $2.5 trillion superannuation industry1 and its associated stakeholders facilitate a vast and complex network of payments, which can be impacted by issues such as mismatched or misdirected payments, lost super and payment delays. 

The potential benefts

Super complexities to overcome with the NPP:

  • Employers: The administrative burden of having a clearing house and dealing with changing employee details. The PayID functionality can make this simple and put the onus on the employee.
  • Super funds: The need to reduce the costs, improve efficiency and boost the customer experience. With simpler reconciliation and quicker access to funds, these challenges can be eased.
  • Members: The need for up-to-date balances, keeping track of lost super, and easy access to funds are key. These can be facilitated with PayID and near real-time payments.
  • ATO: The ATO’s goal to make super payments simpler and reduce the instance of lost super will be easier to achieve when all of these factors are in play.

Innovation is key

For each group within superannuation, it is clear the NPP can help resolve many challenges, in turn streamlining the payments process. However, seizing the benefits will require superannuation funds to identify pain points and innovate solutions – in the form of ‘Overlay Services’. If we describe the NPP as the ‘train tracks’ for delivering payments, the Overlay Services are the ‘carriages’, which are tailored solutions created by organisations to delight their customers.

Overlay Services developed by superannuation organisations could potentially include:

  • NPP powered SuperStream: It could leverage the enhanced data capabilities, offer simplified addressing and real time capabilities to further improve SuperStream.
  • Micro top ups: This enables consumers to round up every expense to an agreed amount, and automatically put that difference into their superannuation account. The PayID can make this simple and accurate.
  • Rollovers: Use NPP to simplify and speed up the rollover process between funds when a member changes provider.
  • Pension drawdowns: As Australia’s population ages, retirees are looking for flexibility in how they manage their superannuation funds, and want easier access to their money. The NPP can reduce the need to fill out forms and wait days for a payment – and could incentivise the member to keep their money in a super fund rather than moving it to a bank.

Collaboration for solutions

To develop innovative, impactful Overlay Services, participants in superannuation will benefit from taking a collaborative approach. The key is to engage early and to work closely with aligned partners and experts. For superannuation funds that seize the NPP’s potential, they have a chance to play a greater role in their members’ financial life than today.

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