With the New Payments Platform (NPP) going live in late January, Australians have now joined the ranks of consumers able to enjoy real-time payments. Since the end of last year, we have begun to see commentators in the media proclaim that the NPP will be the final nail in the coffin for cheques, and perhaps even cash, with the ability to send payments electronically in the real-time expected to encourage more consumers to switch to electronic payments.
Paying a tradesperson, buying goods off eBay, or even making a large purchase such as a used car should be made easier as consumers will be able to transfer money for the purchase and then wait just moments to ensure that the other party has received the payment. The NPP is also expected to displace cash for peer-to-peer (P2P) payments, reducing the need to get cash out to quickly pay someone back for a shared expense like dinner out or paying a portion of a bill.
So while the NPP has the potential to support greater use of electronic payment methods in Australia, will we see any significant effects on consumers’ payments behaviour in the months immediately following the roll-out of the NPP? A key barrier to this is the fact that, at present, awareness of the NPP is low among Australians.
According to RFi Group research, just 15% of smartphone owners surveyed in December 2017 were aware of the NPP. Furthermore, less than half of those aware of the NPP understand it, with just 6% of smartphone owners believing that they have a very good understanding of the NPP (understanding rated as 8+/10).
As the NPP rolls out we can expect that awareness and understanding of the effects of the new platform will increase, driven not only by the media but also by word-of-mouth. However, it is unlikely that we will see all consumers aware of the NPP in the near future, especially those consumers who are not currently using electronic payment methods.
The low level of awareness and understanding of the NPP is important as unless consumers know about and understand the benefits of the NPP, and real-time payments in particular, where is the incentive to switch from cash or cheque to electronic payments?
"The good news is that while consumers may not have heard of the NPP, they already see the benefits of real-time payments, with around one in three Australians indicating that the ability to make and receive payments instantly would have a highly positive impact on their lives."
Millennials are the most likely to believe this would positively impact their lives. With Millennials more likely than average to be using electronic payments, this suggests that those already using electronic payments are likely to shift more of their payments away from cash as a result of access to real-time payments, but it may take more to convince low electronic payment users that real-time payments are superior to cash or cheque.
For consumers to realise the benefits of the NPP they will first need to trial it, and with low awareness levels, we may find that the effects of the NPP on consumer payment behaviour will not be immediately obvious.