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Unlocking the NPP: SAP Capabilities for Faster, Smarter Payments

michael_davies
Product and Topic Expert
Product and Topic Expert
4 weeks ago
581

The payments landscape is rapidly changing and in Australia the New Payments Platform ("NPP") is providing new infrastructure and capabilities.

Our customers want to understand more about what the NPP offers and how SAP is enabling the adoption of the new innovations, as well as the implications for data and payment processes.

This Blog series is the result of close collaboration between SAP and the Australian Payments Plus team, who are responsible for the NPP. It is a combined effort with the SAP ANZ localization team, notably my colleague @Bino_Philip  who has done much of the heavy lifting in defining the SAP response. Any errors are mine alone.

This is an evolving topic and whilst we’ll try to keep it current, please ensure you check the latest SAP documentation. Also bear in mind that until we publish a Development Roadmap, any comments on plans, intentions or other forward looking statements are personal views and not the official SAP position.

The series is planned as:

  1. Unlocking the NPP: SAP Capabilities for Faster, Smarter Payments
  2. Unlocking the NPP: Payments overview
  3. Unlocking the NPP: PayID
  4. Unlocking the NPP: PayTo

 

When will SAP be NPP ready?

This is the number one question we get on this topic, with a mass of confusion on the changes required for NPP and opportunities it presents.

The simple answer is that SAP is already NPP capable with many customers benefiting from real time payments and the additional capabilities available now.

However, to understand the full picture of what is available in SAP across the range of NPP capabilities, how we are delivering innovation and plans for the future, please read on.

 

So what is the NPP?

The New Payments Platform is:

  • Infrastructure which enables real time payments across Australia
  • Additional capabilities to improve security and simplify payments
  • Operated by Australian Payments Plus, whose members include the largest Banks, payment processors and businesses in Australia
  • The eventual replacement for the Bulk Electronic Clearing System (“BECS”) overseen by the Reserve Bank of Australia which will be decommissioned by June 2030

There is a mass of additional information at https://www.auspayplus.com.au/, including technical documentation and file mapping guidance.

The NPP is particularly relevant for payments where Payer and Payee use different Banks and the funds need to be transferred between them, for example from a Westpac account to an NAB account. The current BECS cross bank clearing is a periodic batch process on business days only whereas NPP is a real-time process available 24/7.

The NPP is already available and is being widely used for personal banking. NPP is the technology behind the Osko brand which enables real time payments using the PayID function, removing the need to share Bank details (BSB and Account number).

Note that NPP is currently only relevant to payments within Australia where the Sending and Receiving Banks and other Financial Institutions are connected to the NPP. They can connect directly as an “NPP Participants” which requires them to meet strict criteria and is largely limited to major Financial Institutions. Other entities who wish to provide NPP services (“Identified Institutions”) cannot connect directly and must have an agreement with a sponsoring NPP Participant. Where the Payer and Payee use the same Bank, the additional capabilities of NPP such as PayID, PayTo (see below) are still relevant, even though clearing of payments is handled within the Bank.

 

Architecture

Individuals and Corporates will continue to transact though their Bank which for simplicity we will assume is connected directly to the NPP as a “Participant”.

 

michael_davies_0-1762849582451.png

 

The role of SAP does not change: it will create the payment instructions, receive status updates and bank statements and enable the Bank integration. Additional message types such as for intraday bank statements and APIs may also be relevant.

We do not currently envisage any requirement for SAP systems to connect directly to the NPP.

 

NPP capabilities

The NPP is not just a change in technology or a new platform. It is designed and built to deliver significant business benefits and opportunities to innovate new business models. By sending payments using the NPP, SAP customers can start to leverage these current capabilities and investigate the benefits and opportunities they provide:

  • Real time payment clearing. This means that funds reach the payee in seconds not hours or days, improving cash flow. This has benefits in scenarios such as Public Sector benefits payments where recipients may have an urgent need, for example Bush fire related Disaster Recovery Payments. Similarly real time payments and their related status messages enable immediate execution of follow-on processes such as order credit unblock, sales order processing or delivery release with confidence that the funds have transferred.
  • Real time payment status messages. This means errors can be corrected faster and more payments reach the Payee on time.
  • 24/7 operations, 365 days a year. This provides additional flexibility in payment processing, from processing urgent payments to making payments precisely on the due date, even where this falls on a public holiday. It also assists with meeting compliance obligations, especially around payroll and superannuation.
  • PayID enables payments to be made using the Payee’s email, phone number, ABN or other identifier, without requiring their BSB and Bank Account details
  • PayTo agreements provide a greater degree of control and transparency for Direct Debit arrangements. The agreement or mandate is stored within the NPP and the Payer can approve, vary, end and define conditions (such as maximum amounts). The Payee needs to quote the agreement number rather than the BSB and Bank Account in the Direct Debit payment file.
  • Confirmation of Payee. This service reduces fraud by checking the name on the Bank Account with the name of the intended Payee recipient.

 

NPP payment files

We will go into more detail in the next Blog on the requirements around making a payment using NPP. The main point to be aware of is that whilst the NPP has specific requirements for payment file format and field mapping, the Bank determines what is required from SAP.

Each Bank will provide documentation on:

  • Payment file format - this is usually based on ISO20022 standard
  • NPP relevant fields, i.e. what is required to ensure processing by NPP rather than BECS

Once the file is created with the required format and fields, it can be sent to the Bank for processing using standard integration. We’ll discuss integration impacts and the challenge for SAP to create a standard NPP compliant solution in the next Blog. 

 

SAP Approach for NPP

Whilst the official SAP Roadmap is still being developed internally, our general approach can be understood as:

  • SAP solutions will be developed and delivered incrementally over future years, rather than as a single release.
  • SAP solutions will be based around a single common standard, such as the ISO standard format and not numerous variations such as for Bank specific formats.
  • SAP will focus on solutions for S/4HANA Cloud, both Public and Private Editions.