2020 was a massive year of change in the way businesses made and received payments. Unprecedented demand for cashless payments during the COVID-19 pandemic forced businesses to adapt their systems and processes to offer customers a range of modern payment methods. But business leaders shouldn’t relax just yet – the period of change in payments isn’t about to end. 

The surge toward digital payments we saw last year wasn’t a one-off phenomenon but a speeding up of a long-running trend toward a cashless society and seamless digital payments. As time goes on, technology will make payments not just cashless but cardless as well, and then so seamless that people will hardly have an experience of paying at all –effectively marking a death of payments, or at least payments as we know it. 

2021 will see several key steps on this continuum. Companies will need to be nimble and willing to embrace new technology to compete in a market where consumer expectations are transforming at speed.

Real-time NPP transactions will be the default 

Real-time transactions via the New Payments Platform (NPP) are on-track to become the default option for almost all everyday payments in 2021. 

Recent figures from the Reserve Bank of Australia reveal the NPP is steadily taking market share from other payment methods. Both the value and volume of NPP transactions in Australia increased by more than 85% in 2020.

As Australian consumers increasingly come to expect inexpensive, real-time payments, it will become important for businesses to connect to the NPP.

The need for fast payment times to suppliers has also been accentuated with the passing of the Payment Times Reporting Bill in September, placing larger businesses under increased scrutiny to pay the smaller businesses they partner with in full and on time. 

As more businesses convert to using the NPP, it won’t be long before real time payments cease to be a luxury and become assumed, just like we assume that if someone sends us ‘mail’ they mean ‘email’, not a letter by the post. 

PayIDs to become a serious competitor to BPAY

Clever use of large volumes of PayIDs will become a serious competitor to BPAY in 2021. Why fiddle with biller codes and customer reference numbers when you can have personalised payment details?

Increasingly, larger companies will look to fully automate their payments, starting with the pay-in.  Due to poor reconciliation systems, many big companies don’t know what money they have available for suppliers, because they are slow to work out what they have received from their own customers. The NPP allows real-time payments to be reconciled in a couple of seconds through the use of PayIDs, compared to a day or two for BPAY payments.

New Mandated Payment Service to challenge cards

The launch of the new Mandated Payment Service (MPS) towards the end of the year will be the beginning of the end of credit cards’ decades-long monopoly on customer-friendly checkouts both online and offline.   

The MPS will enable customers to authorise third parties to initiate payments from their bank accounts using the NPP. At its simplest, the MPS is a real-time version of direct debits. But its combination of smart consent mechanisms, real-time flow of funds and the third-party ‘Initiator’ role makes it a game changer for everything from simple eCommerce and wealth management to real estate and custodial services.

Compared to a traditional direct debit, consumers have a much higher level of control, because they can set a very specific mandate. For instance, with the MPS, a customer could give a company the right to direct debit exactly $12.29 on a particular day, never more or never less, or they could give the company permission to take whatever money they want from their account whenever they need it to cover services rendered, and everything in between. 

Credit cards are costly to use. Despite this fact, most people who make online purchases are using cards because of the convenience. It is a poor customer experience to be forced to leave an ecommerce site to go to a banking portal, do a bank transfer, and come back to the site. It is much easier for the customer to type in their card details on the ecommerce site.  The MPS will provide another convenient way of paying that doesn’t require a card, is cheaper, and provides faster payment to the merchant. 

Companies will increasingly outsource payments

As the technology behind payments becomes more complicated and consumer expectations continue to rise, increasingly companies will look to outsource the payments process to third-party experts – allowing to them to focus on what they do best.  

Just as airlines don’t own their own airplanes anymore because it isn’t a core value proposition, so businesses will move away from thinking that payments is a problem they need to solve themselves.
 
All these changes together add up to faster, easier and cheaper payments in 2021 in beyond, and more options for customers – helping companies to accommodate rapidly evolving consumer expectations about payments. It’s better for everyone.