Australia’s new real-time banking payments platform
itnews.com.au
itnews.com.au
I've written about this before, but American is terribly far behind on this:
https://penguindreams.org/blog/the-american-banking-system-i...
The closest thing we have in the US is Zelle, which is not a government mandated standard (like ACH) but a private standard created by banks and which only a fraction of banks in the US currently support.
And of course there are services like Venmo/Paypal, but these are private opt-in services, where as most other countries have this system mandated and fee-free between banks via their government reserve banks.
I was needed to help pay for a friend in the west coast for rent where the landlord took venmo. venmo denied me for who knows what reason. while this is going on, the landlord tried setting up google wallet (which I had already). I tried sending, but it never transferred (the bank said it was google's fault). I tried another one and it had to do that insert some money into account and read it to me dance which never showed up until later (which by then I gave up).
Although from what I understand on March 16th, 2018 the US will at least get same-day ACH. However, it will still be batch processed only two times each day--During banking hours no less! https://www.nacha.org/rules/same-day-ach-moving-payments-fas...
There is a NPR planet money on why the US has such an archaic system: https://www.npr.org/sections/money/2013/10/04/229224964/epis...
Their hypothesis? Unsurprisingly, perverse incentives. Wire transfers in the US, which usually carry a high fee ($30) are very lucrative for banks so they don't have much interest in eliminating the need for wire transfers at the moment, but it appeared that there was growing interest in moving to real-time eventually.
I'd argue the system this sort of replaces, bank numbers + account numbers, was still better than the US. It provided next day transfer between banks and intra day transfers between the same bank. All for free.
Is this for real ? This sounds incredibly expensive. We have free next-day wire transfers within the entire EU, and real-time transfers for free in The Netherlands. Even my business bank account only charges 2 cents per transfer.
How do Americans wire money to each other when it's so expensive ?
To their credit, they've got it to the point where I can take a picture of the front/back of the check with my smartphone, upload the photos to my bank's website and deposit it that way, but the first time I did this I felt really weird about the whole thing...
In every other country I lived in, I never ordered checks, or used checks. In the US, even if I bill pay via my bank, it mails out a physical check to company it doesn't have an ACH policy with (like landlords)
Unless you'd like to hire lawyers to help you with a fraud case, I'd recommend not taking that our of your backlog.
It was all a bit bizarre, considering how much time both banks needed to spend on a routine transaction...
It used to make me laugh when Americans would describe Australia as 'like the US 10 years ago'.
Then I would write them a check.
Then I would try and send a text message that wouldn't go across networks as had always worked in Australia for years...
In Australia leaving in the 1990s I had never written a check because even then B-Pay was around and people did direct deposit for rent and things.
But Australia probably has about as many banks as California, so we have a much smaller problem.
Then you discover that:
1)You need an app to use it (because websites are so passe!) - an app that may or may not work, and will likely crash;
2)You will hit an arbitrary, hidden limit when you try to use it - as insultingly low as $300/week for an out-of-network bank.
These limits are not posted anywhere, and it takes 2 levels of computer service just to find out what they are.
3)The ClearXChange network (aka Chase QuickPay, etc) that didn't have these drawbacks has been shut down and replaced by Zelle.
After going through this, I am still mailing actual paper checks to pay my rent. It is simply easier for everyone involved, and there are no fees.
I thought this was fairly normal, until I heard about the way US banks do it on an episode of Planet Money.
The interesting thing about the new Australian system is the fact that you can use an email address or phone number instead of annoying bank account numbers, that's a nice feature. I find account numbers give me crippling anxiety when making big payments, ending up having to triple check that I've inputted every digit correctly etc
https://www.europeanpaymentscouncil.eu/what-we-do/sepa-insta...
https://www.unicreditgroup.eu/en/press-media/press-releases/...
Most places don't accept anything besides cash for payments. Opening a bank account still involves a ton of paperwork. Official mobile apps, if they even exist, are horrible. Waiting for 2 days for SEPA transfer, even though it's usually technically done within hours. No realtime transactions for card transactions (even though they have the data right away), etc.
Unless the "SCT Inst" becomes a law that every bank must obey, I doubt majority of banks will have it implemented even within 5 years.
- N26: it took me literally 10 minutes. Identification via video chat.
- comdirect: as far as I remember, I mailed them one 4-page form, dropped by the post office for the PostIdent and that was it.
- Postbank (I needed an IBAN quickly while waiting for comdirect ;) : I walked in, everything was done in 15 minutes.
Now try the same thing in France. Online banks typically ask an initial wire transfer from another French bank since they cannot check your identity directly. And then you need to provide proof of address and salary payslips (or tax receipts). And in the end it easily takes 3-4 weeks to receive all documents and your payment card.
My main problem with them is that they're first and foremost a startup, not a bank. Some issues I've had with them include double transactions, failed scheduled transactions, horrible 9-5 support, unable to unlock card because their web page was down for 24h. On top of that their security practices are horrible[0]
>I mailed them one 4-page form, dropped by the post office for the PostIdent and that was it.
And then you got 4-5 letters over the next couple of weeks. Not to mention that postident itself is a plague.
>I walked in, everything was done in 15 minutes.
And you walked out with a bunch of paperwork, and additional letters sent via post.
I've tried to open or had accounts with the following banks: N26, commerzbank, comdirect, dkb, fidor, ing diba
Dealing with any of them is like traveling back 20 years in time. Comparing it to countries that have it worse is always easy, but that does not mean that banks in Germany are not atrocious.
[0] - https://media.ccc.de/v/33c3-7969-shut_up_and_take_my_money
And while video chat is better than PostIdent, I don't think a trip to your local post office is that bad compared to the alternatives.
As for the ton of paper in the mail, you're right, it's annoying, but that's in no way specific to banking, everything is like that in Germany.
In short, sure, it could be much better, but it could be much worse too.
Regarding the second bank you wrote, "and that was it." In reality, you admit that there was tons of paperwork that took days to receive. So, no, that wasn't "it."
N26 has a full banking license.
https://techcrunch.com/2016/07/21/number26-is-now-a-true-ban...
I was able to open a bank account and get a card in 15 minutes. A few days later, I had a NZ tax number.
Since then this is my benchmark for ease :)
When I moved to the US 4 years ago I hadn't written a cheque in 15 years; I was in for a rude surprise.
So if you use the phone number transfers from the Sparkassen, the transfers themselves will run over SEPA ICT
https://en.wikipedia.org/wiki/IDEAL
Personally I think it should be NORMAL in 2018 to transfer money between bank accounts in near real time. Without transaction fees.
This is more like Swish in Sweden.
IANAL, but I lend a lot of money, and this is what I've been told:
If you give without the expectation it is typically just cash swapping hands in both directions. If you give money to a non family member and expect payments (with or without interest) OR to a family member and expect more than a rate that is defined at the IRS (<1%, IIRC), then the income is taxable. How they tax you on a no-interest loan to a non-family member, I have no idea.
Right now we use Revolut for this, where possible. But that only works when the person receiving the cash also uses it, which isn't always the case. Having a more universal system that works for everyone would be very handy.
One amusing thing about doing this approach is that, if you tend to split who does the principal payment evenly between your group of friends, then you realise you are rarely adding or removing funds from your Revolut account, you are just shuffling the same small sums back and forth between yourselves in order to keep things fair.
I think, in some way, for me, it "shows more acceptance". I noticed that in the "split accurately" way, the greater resistance was not to pay for it but to have someone else pay for it - which in a way is disallowing someone from doing something small for you at that point of time. I dealt with this by proposing that the other person(s) could do it the next time etc. Some would find the proposal acceptable, some wouldn't.
I found that when I "converted" people this way, it led to a more relaxed setting. Perhaps it was a problem with me - finding it difficult to accept money from friends for just a cup of coffee or a meal. For me that meant the relationship was not important and the 'book had to be closed and made to add up'...
Of course, ultimately, these are only anecdotes - make of it what you will.
(Ninja EDIT: Minor clarification)
You are right indeed but might I ask how you made this connection? I never thought of it this way. One reason for it is probably that between my friends and me, there wasn't much disparity in income/wealth at the time when I was fortunate enough to be able to spend time with them regularly.
In other places (like the US), some people can be very conscious about how much they're spending because it's a significant portion of their income. You wouldn't want to split the check when you had a $10 salad to save money and a tablemate had the $50 filet and 2 $10 glasses of wine.
I wouldn’t swish my friend for getting a beer or coffee but if we were 4 and had a dinner bill for €300 I probably would.
- bring me my check, pls
- bring me the check, pls. And I pay for these two bozos (out of a bigger group)
- I'll cover everyone today.
- split it x-ways, pls.
Why do I need to add an extra step to consolidate the bill afterwards?
Also it's easy to join a group that already have a table/tab in a bar for example, and leave before the tab is to be settled. You just say "I'm leaving, who do I swish money for 2 pints?" (Where you'd normally leave some cash on the table).
So yes, the staff can do it. But I don’t mind summing up my stuff on the receipt and just sending money to whoever paid, and the reason I prefer it is because it’s so much quicker when paying (the hassle takes place at a different time and place).
It’s not uncommon to be served by 2 or 3 different people who of course remember who orders an extra beer when they go get it - but that information isn’t recorded, it’s just registered to the receipt on the table. When the bill is brought to the table I think it’s more common than not that the person bringing it did not serve everything on the receipt so would not be able to split the bill without input from the customers.
It's not cumbersome at all, they have POS systems that track individuals at tables, not whole tickets. The server inputs for the table as well as which chair they are sitting in. Then it is very easy to split a ticket in a variety of ways. I think you are complicating the process in your mind or you frequent places that don't use technology.
I think it varies, that kind of tech would only benefit a regular sit-down restaurants where the chairs are in fixed spots and constant. It doesn't work for a busy bar with me shouting "3 more beers" as the waiter walks by.
I assume the same or similar POS tech is used everywhere but in most places here I assume waiting staff either ignore it or charge everything to "chair 1" at the table, simply because so very very few ever split a bill to who ordered it. Since no one does, it's less work taking the hit when someone does (and asking people manually) rather than assigning orders to chairs all those times when no one splits. Obviously, that would also change if more people would split - so I'm guessing that with tech for splitting bills without staff help so prevalent here, it won't be common to have staff split bills.
Getting caught in the middle of billing disputes wouldn't be fun either. Easier to just require someone pay the whole thing.
The application can be used for any transaction. I usually use it if I've been out with some friends, then it's super easy to split the bill afterwards. Or if going shopping. Or if we share a taxi.
Before we would either settle in cash or by trying to spend approximately the same. Now everything is done this way.
That's atleast the way it works in Denmark.
It's cheap, fast and simple - all you need is a name of account holder and account number.
I don't get paper bills for services such as phone/power/water/insurance/tv, they are delivered to my bank electronically and either paid automatically or I log in (BankID smartphone app) and confirm the payments.
So the transfer system isn't used for bills, but the same authorization system is used for bills/banking and direct transfer.
There are also issues with Spain being rather anti people setting up simple businesses from home.
When you go to a birthday afterwards, one has bought the present and the others transfer their part to him.
Danes send money to eachother daily.
MobilePay in Denmark, Venmo, Cash, Paypal in the US most of the use debit card/bank accounts.
One of the problems turning it into a business though is that the Durbin Amendment and national legislation have reduced the interchange fees so that it's hard/illegal to charge for use of the card.
But it's a booming business that only just started.
When paying somebody, when you enter a recipient’s PayID, the bank confirms by showing the recipient account holder name.
So in effect, they’ve just implemented a nationwide number-to-name lookup system.
Separate to this, these two banks are pushing it hard. It feels like a land grab, since a single phone number can only be assigned to a single bank.
I hope there'll be a way to delete a phone number or email address from the lookup system once it's added, so that you can move it to a different bank.
I'm happy to see real-time payments, though. That will make it easier to bounce money around between savings accounts at different banks, no more waiting 3 days for EFT to clear.
Banks may offer smaller maximum transaction sizes for Osko, or delay the first payment to a new account by up to 24 hours, in an attempt to reduce fraud.
That does sound like a bit of an information leak. I mean the big advantage is that you can make pretty big purchases, like pay for a bicycle or car, in real time without having to wait to see the transfer the next day.
Heck, Nigeria rolled out a very advanced one about 7 years ago
NBN is a completely different beast, being an internet carrier and service wholesaler with ambitious and expensive last-mile infrastructure concerns, for one thing.
But I just hope that we don't leave out those who prefer to deal with physical currency in the name of "progress"
I worked on a hackathon for NAB where we proposed banks could be an auth provider for payments that require ID, e.g. Buying a SIM card, signing a waiver etc at the point of sale
And has someone who has worked for Australian banks it is probably on the cheap side.
Many of the core systems that needed upgrading are old and there isn't necessarily the people around who worked on them. And so there are a lot of costs that go into upgrading.
I think/hope the banking and financial sector in the future will be much more lean and optimized, both in terms of systems and management.
The most dangerous word in software development.
Not easy at all.
Too many or too few?
This project has been underway for about 6 years now. Think of it as ~$166MM per year for the rollout. I agree that it would be nice if the Australian financial sector were lean and optimized in the future, but I don't hold out that much hope to be honest, despite other countries managing to achieve this.
[0]: https://en.wikipedia.org/wiki/Australian_Payments_Network
- Some people are just old-school. I've had several landlords who barely understood the internet, good luck getting them to give their banking details to some trendy company in SF. I had one roommate who would routinely drive 30 minutes to drop off a check in my landlord's mailbox, for example. This wasn't secure, and if either my roommate or our landlord was traveling our rent payments would be late.
- Municipalities or government-supported entities are on unstable ground if they start playing favorite with private payment systems. Try getting a national lab to accept paypal, or the University of California to transfer reimbursement to an IBAN through TransferWise.
I imagine it would be even more complicated for cryptocurrencies. And in all cases, I can't say I blame people for asking for checks: it's often low-level clerks who have to do the work, why should they risk getting fired for your convenience? When the national standard is paper checks, having them stolen, arriving late, being forged, etc are all just "the price of doing business".
On the other hand, no matter how much you save your employer and increase client satisfaction by using something non-standard, you're on the chopping block if something goes wrong.
The thought being if all payments in Australia are seamless and instant AND recorded, there will be no need for cash. Business will no longer be able to hide revenue.
They will make up this spend very quickly.
There will always be need for cash, business who want to pay employees cash in hand and employees/immigrants who are desperate for jobs will accept less than minimum wage in cash
ING has a long history of fee-free ATM withdrawals. Nothing to do with CommBank.
Although, I've still not actually figured out how to pay. It's telling me I can receive. I just can't pay (with CommBank). Friends on ING in the same boat.
I feel they're a little to late to the party for PayPal-like payments to a email or number.
Looks like this is adding a convenience numbers/mapping to addresses and speeding the transfer time, which is welcome. Though I appreciated the nightly clearance because on a few occasions it gave me a chance to change the amount.
And light years behind some other countries.
Going from Australia to the UK felt like going back in time 20 odd years.
I have mobile banking for everything, I can do almost instant (sub 30s) transfers between banks, we have contactless payment cards and Apple/Android pay support is ubiquitous, and we can do person to person transfers using a phone number (the horribly named "PayM").
What are we missing out on here that we should be pushing our banks for? I do see that there are a number of things that people just don't seem to use very much here, but that's less about the tech, and more that there just doesn't seem to be the demand, PayM being the big missed opportunity.
I know Barclays have an app but I would prefer it to be a standard feature.
In Australia (CBA at least) it is instantaneous, in Hong Kong, it is at least 3 days.
CBA has also automated most of the account management through its netbanking - whereas in Hong Kong I need to visit a branch to create or delete an account.
> How quickly do credit card transactions appear in your account?
On this note, I just checked, and the £9.75 I spent on breakfast 90 minutes ago is on my account right now. I don't know exactly when it appeared but I expect it was near enough instantaneous. Is there a reason it wouldn't be?
* Paper still required for most proof of identity/address etc. Particularly annoying almost all providers are pushing customers to move to online statements but then opening any new accounts still require paper
* Wet signatures still considered king/stronger than other forms of identification. This has caused me issues as I barely ever need to sign and hence my signature is never consistent!
* Took 5 weeks to open an everyday account upon arrival. Seems pretty standard for all ex pats I've talked to. If you are a UK local maybe you've never experienced this?
* Slow to list pending transactions although based on other posts here I may be an outlier in this experience. I assume the new digital banks (Monzo etc) have improved this significantly
* Having to specify that you want a contactless debit/credit card - do people really not want contactless cards? You can always just not use that function...
* All the banking apps I've seen over here are terrible, unfortunately didn't get to try out any of the new digital banks. I assume CBA is probably still the king for mobile banking capabilities
* When I first arrived there was no Android Pay or Apple Pay, but thankfully that did come in around mid to late 2016
EDIT: I also signed up to use PayM but never came across a single person that I needed to transfer money to/receive from that actually had PayM
> Paper still required for most proof of identity/address etc.
Government requirement, the "100 point test". Introduced to cut down on money laundering. It also cuts down on a lot of other crimes. In Australia I used my credit cards for any old thing. In the US if I sneeze too loudly the bank freezes it and asks me to confirm the last dozen transactions.
> Wet signatures still considered king/stronger than other forms of identification. This has caused me issues as I barely ever need to sign and hence my signature is never consistent!
I never had this experience. PIN or ID for identity, signature for legal effect. Meanwhile in the US I sign for everything.
> Having to specify that you want a contactless debit/credit card - do people really not want contactless cards?
This might be specific to your bank. They marketed contactless heavily when it came, right after heavily marketing chip-and-PIN. Might have been an own-goal.
I'm told, anecdotally, that a lot of the UK's banking modernisation in the 90s was done by Australians who participated in Australia's banking modernisation in the 80s. Might not be true, but it sounds cool, so I'm going with it.
My understanding is this is largely due to very tight regulations that have been placed on the banks to verify identity and stop money laundering. They also now rely on the banks to collect taxes and close accounts of illegal immigrants.
Lots of places ask for signatures, but I've never had anyone actually check my signature. Which is good, because like you, my signature is completely inconsistent.
Pending transactions I've never had an issue with - they usually appear on my phone within a few seconds of me tapping my card. And my banks automatically issued me contactless cards without me having to specify - but they did have an opt-out.
Android Pay was late, but is now accepted virtually everywhere across the country.
Banking apps are terrible. No argument there. Hopefully the new open digital banking legislation will fix that.
For sending money I've still always just used plain old FPS (instant) bank transfers or PayPal. PayM hasn't really been pushed enough yet...
Honestly the Nationwide app is pretty good imho
Wouldn't they just send a courier with the papers to your place to sign it? I don't have any UK accounts so just wondering, because that's what my experience signing physical documents has been in Czech. On the other hand, N26 in Germany just needs a video call.
Source: I work on the account resolution service that is part of this.
Would this prevent me receiving payments?
But that said I would rather trust my bank than PayPal and to be fair I run into people all the time without an account.
It’s particularly a ‘problem’ when your payments are delayed by public/bank holidays (especially those that only occur in a bank’s home state!) and feels particularly anachronistic compared to modern payment gateways.
Out of that $1bn AUD, probably half is on banker’s wages :P
Have you ever had one take longer than zero time?
I have accounts with two banks (one for personal, one for joint finance with my wife) and FP makes that so easy to manage, if the joint account needs topping up I can do it in a minute or two on my laptop or phone.
I've had instances where it's taken more than hour, although it usually is as near instant as physically possible.
SCT inst is gradually coming. Bear in mind the SEPA area covers some 500 million people, it's no small feat compared to much smaller domestic markets (Nordic European countries have been ahead of Australia in this regard).
Inter-country and intra-country transfers are all identical (all running via SEPA) and should make no difference.
SEPA transfers are legally limited to 24 hours already.
SEPA ICT is being rolled out right now, from summer on most banks should support it, which transfers up to €15'000 in 10 seconds.
I've done hundreds of transfers, sent and received.
In fact, frequently I transfer money to ny parents, or they to any of my accounts (they use commerzbank or postbank), and usually within of 10 minutes my phone gives me a push notification that the transaction has completed and the money is there.
And often banks have copperations, where, between cooperating banks, transactions already run much faster.
As another commentator pointed out, the UK it's instant, now it turns out in Germany it's also instant.
That's 150 million EU citizens.
You shouldn't make assumptions that whatever happens in your country, it happens for the rest of the EU.
Here's Holland's transfer times:
https://hoeveelkrijgjij.nl/blog/belastingen/hoe-lang-duurt-g...
That's another country that takes less than 24 hours. I picked them because when I often visited there as a child they seemingly had chip + pin way before the UK, so I assumed they'd be quite advanced. Not quite so as advanced as UK/Germany though. My Dutch isn't great but it looks like it's same day as long as it's before 15:30 on a working day, otherwise next working day. France I'm struggling with as google is obsessed about giving me UK to France bank account wait times.
Given that, Bitcoins $140B market cap does not seem too unreasonable. As it is international and gives users better privacy controls.
Edit: And several hours to clear
But the Lightning Network might be a solution to this. After reading quite a lot about it, I tend to think that it can work.
what?
What are you saying they've not adopted.
And HN people are loving it!