Telstra supports same-day inter-bank payments
Telstra has just turned on a new service that will eventually allow banks and other financial institutions to complete inter-bank same-day transactions. This means you may not have to wait several days for your pay cheque to be accessed in your internet banking account.
All four banks plus various other smaller financial institutions have signed up for the service, which will allow banks to communicate with one another via a virtual private network (VPN) created by Telstra.
According to Australian Payments Clearing Association (APCA) chief executive officer (CEO) Chris Hamilton, before this technological innovation, financial companies were forced to build multiple links between one another. Hamilton’s company worked together with Telstra to build the new service, which will be a much better system because, ‘at the moment there are hundreds of those links,’ said Hamilton. It’s these links that cause current internet banking services to run relatively slowly.
For example, with EFTPOS there are 17 participants Australia-wide, Hamilton said, and each business has to discover a means to link with the other banks’ computer systems to clear transactions. BPAY, debit and cheque payments use similar networks.
Hamilton continues, ‘What we're talking about is replacing the communications infrastructure between those points of presence, with the points of presence being the banks' servers operating to clear payments.’
Without needing to be a customer of Telstra for any other banking purpose, authorised members of the association will be able to access Telstra's network to make the necessary connections, instead of having to contend with the current structure of multiple bilateral links between each organisation.
The benefit passed on to the wider community will be same-day debit and cheque payment clearing, says the director of IP and integrated data solutions at Telstra, John Ieraci. ‘Instead of settling transactions overnight, the payments industry wants to settle within two to three hours, which is currently what is on offer in some overseas markets. So that was one of the drivers.’
Telstra has had to create a faster communication environment, while the banks need to upgrade their infrastructure. Ieraci believes if banks take full advantage of the new system, same-day transactions will come to fruition in 12 to 18 months.