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The Mandated Payment Service is the Way Forward for Businesses and Consumers

By 27 April 2021August 2nd, 2023No Comments

The next service being enabled by the NPP is the Mandated Payments Service (MPS). This service is a real-time alternative to the traditional direct debit payment process, bringing control to consumers while offering greater opportunities to businesses in Australia.

Australia’s New Payments Platform – the NPP – has been speeding up account-to-account payments since early 2018. With more than 72 million addressable Australian bank accounts and over 6.6 million registered PayID’s, adoption of real-time payments is on the rise with consumers, merchants and billers.

The New Payments Platform

NPP Australia is responsible for maintaining and developing the platform to ensure it evolves to meet the future needs of Australian industry, consumers and businesses. The NPP enables new faster ways to settle account-to-account payments and as a result, can be seen as an alternative to typical debit cards, direct entry payments and even cash.

The NPP is a result of the evolving payment options now available to Australian’s through fintechs like Azupay, offering greater payment choice and flexibility.

The next service being enabled by the NPP is the Mandated Payments Service (MPS), a real-time alternative to the traditional direct debit payment process, bringing control to consumers while offering greater opportunities to businesses.

What is the Mandated Payment Service (MPS)?

The MPS is an automated ‘pull’ payment flow for consumers, merchants and billers. The service allows consumers and business to authorise other approved parties to initiate real-time payments from their bank account via the NPP. The authority or ‘mandate’ contains the details of the payment and can be set up in real-time and authorised through the consumer’s existing online banking app. Mandates can be recurring or one-time and work online, in-store and on bills.

For consumers, the MPS brings greater control of direct debit arrangements. Consumers can easily suspend or cancel mandates and can also move them across different accounts or banks.

For business, the MPS can streamline incoming payments from customers, ensuring the funds are received immediately, at any time of day or night. MPS can also be used to ‘pull’ one-off payments directly from a customer’s account with their full authority.

How does the MPS work?

The MPS consists of 3 steps:

1. Payment initiation capability: This is used by creditors to request payments from a customer’s bank account, where a ‘mandate’ will be set up for the customer to authorise the payment.

2. A centralised database for creating, storing and maintaining mandate records: This centralised database is securely owned and operated by NPP Australia.

3. Associated business rules: The payment initiation will be acted upon by the bank, where the customer’s bank account to provide assurance.

What sort of payments can be set up?

Regular scheduled payments, like bill payments, payroll, school fees and subscriptions. With full control over the amount, the frequency of payments and the schedule, as well as other terms.

What do customers need to do?

Customer authorisation is at the core of the MPS. The customer provides authorisation for creditor payments to be safely and securely processed from their existing online banking. This authorised payment is captured as a ‘mandate’, which serves as a record of the customer’s payment(s) well in advance of any payments being processed.

Performing authorisation within a customer’s existing online banking benefits from their authentication practices, which are already in place today. The ‘mandate’ is created and stored centrally. This can be viewed and retrieved as a mandate record from both the customer’s bank and the payment initiator’s bank.

Examples of information held within a mandate includes:

  • Full name
  • Bank account details
  • Payment initiator details
  • The amount of payment
  • Payment frequency
  • Accept or decline payment

What’s in it…

For customers

  • Keep control of your money
  • All details of mandates readily available
  • Uses familiar, secure and trusted banking apps
  • Detailed statement information
  • Maintains privacy of personal data
  • Supports various payment terms
  • Moves easily from bank to bank

For businesses

  • Flexible payment system
  • Real-time approval, payments and confirmation
  • Eliminates errors and fraud
  • Streamlines reconciliation
  • Simple integration with third party services
  • Integrates with future NPP capabilities
  • Works with any bank
  • No dishonour fee for failed transactions

When will the MPS be released?

The MPS is currently in development and is expected to go live in June 2022.