The Australian New Payments Platform (NPP) is collaborating with SWIFT, its technology partner, to deliver a sandbox for APIs for developers to test as the finance industry looks to find ways of welcoming in new technology.
The NPP has faced pressure from the major banks in the last few years to start untangling the often-messy transactional supply chain and replace it with something much more suited to today’s needs.
With legacy links spanning decades forming many of the finance connections currently in place, NPP will hopefully be able to create a simpler and more transparent way of implementing payments infrastructure.
The sandbox will be based on cloud technology and will allow developers, coders and programmers to test out all their hypotheses and project ideas before anything is slated for a wider release. This will allow for the removal of many bugs and for greater innovation to take place.
This has led some companies to redesign their core offering, with payments business BPAY changing its output to position itself as a software developer rather than the cheap payments processor that it had originally set out to be.
Another exciting aspect of the sandbox is the quick rate that it can move things forward in the industry, as many third-party fintechs and software developers working on payments processing can now get hold of a platform that allows them to iron out any kinks. Being able to smooth out the flaws will help their software become more trusted by the industry as a whole and will allow banks and financial institutions to make use of their services.
This also levels out the playing field somewhat for newer entrants to the market, which will now feel that they can get more involved and show their products to interested investors with confidence that they can work the platforms effectively.
One of the key issues in the past has been just how obstructive the high costs of legacy links have been for new market players, and this has dampened their ability to contribute, despite having clearly impressive portfolios in finance software development.
This is because of what is known as the bank-state-branch (BSB) mechanism, which mandated bilateral links and eventually led to the Reserve Bank of Australia (RBA) stepping in to put a stop to it, heralding a new era of technology-driven payment processing.
RBA has become increasingly concerned that without intervention, it would carry on stifling innovation in the sector, which would eventually make the domestic payment scene become obsolete. This would drive Australian businesses to rely on overseas processing, driving money out of the economy and increasing financial risk.
It has therefore decided to come out and press for the development of the NPP, calling on the major banks to get behind it.
Businesses that suffered from waiting for the two-day clearing cycle should see benefits. In the past, this typically enabled larger companies to keep hold of a capital float for a longer period and prop up their liquidity while preventing others from accumulating theirs.
In a statement, the NPP said that it was sure that the sandbox API facility would mean that “external parties will be able to build and test NPP-based solutions in an independent environment that will help to foster innovation and competition for NPP-based payment services.”