Bank boss wants greater use of cyberspace payments

Reserve Bank boss tells Aussies to hurry and register for new payment system.

cyber payments

The nation’s top banker is urging Australians to pay bills using a technology that has been shown to leave individuals open to cyber theft overseas.

Speaking in Perth on Tuesday, Philip Lowe, the Reserve Bank of Australia (RBA) governor sang the praises of the ‘PayID’ system, which facilitates the instant transfer of funds between accounts.

“(The RBA) operates a key part of the infrastructure supporting Australia's new payments system, generally referred to as ‘the NPP’ (new payments platform). This system allows you to move money between bank accounts in real time on a 24/7 basis using an easily remembered PayID, such as a mobile number, to address the payment,” Dr Lowe explained.

“BSBs and account numbers can still be used, but if you have not already done so, I encourage you to contact your bank to register a PayID, which makes it easier to use the new system.”

But writing in The Conversation, Swinburne University of Technology adjunct professor Steve Worthington used lessons from a similar platform – Faster Payments – that has been used in the United Kingdom for a decade and which is riddled with fraud risk.

“Part of the problem in the UK is that banks have trouble identifying potentially fraudulent transactions,” Professor Worthington said.

According to the managing director of the UK Payment Systems Regulator, Hannah Nixon: “There is no silver bullet for [authorised push payment] scams and some people will still, unfortunately, lose out.”

She added that account holders needed to take “an appropriate level of care” in protecting themselves.

Last month, Dr Lowe said in a statement to the House of Representatives Standing Committee on Economics that just 1.8 million Australians, or 7.2 per cent of the population, had registered a PayID.

He said the take-up of the system had been slower than expected and blamed the major banks for dragging their feet, compared with smaller financial institutions who had embraced the system more readily.

“Despite the relatively slow start, we still expect that the new system will provide the bedrock upon which further innovation in Australia’s payment system will be built.

“The Payments System Board is keeping a close eye on access arrangements so that those with new ideas and better ways of doing things can use the new system,” he said.

FinExtra reported this week that the NPP system was expecting a surge in transactions as the country's Big Four banks rolled out Osko, an overlay service enabling account-to-account real-time payments via e-mail and mobile phone numbers.

According to MoneySmart, the new system allows users to:

  • transfer money instantly between accounts at different financial institutions
  • have the transferred funds available in the payee's account within seconds
  • make payments any time of day, 365 days a year
  • include more detail about your payment, like additional text, invoices and receipts.

Users need to register with their banks to take part in the NPP. Once they have chosen an easy-to-remember ID, they no longer need to use BSB and account numbers to make electronic payments.

The system, which can operate from a smart phone app, was introduced in February this year by 60 Australian financial institutions.

“If you notice that your PayID has been used without your permission, or that there's an error on a PayID transaction, you should report it to your bank,” according to MoneySmart. “If your bank subscribes to the ePayments Code, the same processes apply to getting your money back with a PayID transaction as a normal transaction.”

Would you feel safe using the new PayID system to transfer money out of your account? Is there any pressing need for payments to be made instantaneously?

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    COMMENTS

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    5th Sep 2018
    6:13pm
    It's all good if the banks save / make more profits as a result of customers adopting this technology.
    dual security such as retina scan on phone plus a simple ID would work
    Anonymous
    6th Sep 2018
    12:38pm
    So long as banks recompense customers when fraudsters rip them off because of the banks' system.
    MICK
    6th Sep 2018
    10:28am
    Will stick with what works until any new system becomes safe. Blockchain has that capability so not too far down the track.
    Rae
    6th Sep 2018
    12:59pm
    Yes MICK I'll wait for blockchain too.
    pammy
    6th Sep 2018
    11:04am
    i still pay with cash safest
    Rod63
    6th Sep 2018
    12:07pm
    But you can only pay by cash if you can physically hand it over.
    In any case, it isn't the safest because it means carrying large amounts of cash on your person.
    casey
    6th Sep 2018
    11:58am
    I still pay my bills by cheque whenever possible. Don't suppose it will be long before the banks scrap chequeing accounts though.
    Rod63
    6th Sep 2018
    12:09pm
    I would use it but most payments don't need to be made instantaneously.
    Old Geezer
    6th Sep 2018
    12:35pm
    Agree. Any that do are too fishy for me.
    shirboy
    6th Sep 2018
    1:41pm
    Yes more profit for the banks & they can lay off their tellers.
    KSS
    6th Sep 2018
    1:45pm
    I can see there might be times when an instant transfer would be convenient e.g. paying the deposit on a property, or paying for a holiday from an on-line savings account - some of these accounts must be linked to a transaction account and transfers take a couple of days so you lose the interest on the money whilst the banks rake in interest on your money. But like others I don't see the necessity for more usual payments or transfers to be done in 'real-time'.

    But then I don't see the need for electronic payments for small items either like a newspaper of a coffee.
    HarrysOpinion
    6th Sep 2018
    7:42pm
    The Masterchef conveyancing fraud has put the PEXA conveyancing system in the spotlight
    PEXA was warned all clients of the new conveyancing system that the past fortnight has seen similar breaches in less publicised conveyancing matters.
    There were two further serious frauds in May 2018. One was in mid-May, when a client lost about $700,000, and the other on May 31 when a client lost more than $1 million. $672,000 scammed in a May 14 settlement on a $750,000 property sale.
    The red tape the solicitor and the conveyancer have been going through with these banks to date "has been unbearably tedious, slow, lethargic and unprofessional to say the least.
    The bank will only release the frozen moneys back to the vendor when they finish this process.
    The fraudsters ANZ account had $165,000 deposited, but all these funds have been withdrawn over four transactions and transferred to accounts in Thailand. Of these funds, $39,000 has since been recovered by the ANZ and returned to the solicitor's trust account.The ANZ says they were not able to retrieve the rest, "end of case, end of story as far as they are concerned."
    After the CBA and NAB finally reimburse/return the frozen funds, the vendor will be $126,000 short of the total $672,000 settlement moneys.

    It is possible the conveyancer's computer was not necessarily the only one hacked or in fact where the hacking originated from.

    When another fraud was reported to the police fraud dept on May 19, the vendor was told, verbally and over the phone, "to let it roll with/via the solicitors“ and if I still have a problem after that, to come back to the Police." These funds were destined for nursing home requirements.

    To state: “If you notice that your PayID has been used without your permission, or that there's an error on a PayID transaction, you should report it to your bank,” according to MoneySmart.
    This is simply NOT GOOD ENOUGH!!!! Millions could be lost and unrecovered. STOP TREATING THE BANK CUSTOMERS LIKE IDIOTS!!!!!

    The cyberspace is like the old "Wild West". There are no law marshals, no sheriffs, no posey. In today's modern times the police are hardly interested in fraud involving financial transactions transmitted over Internet.
    TinTin
    7th Sep 2018
    5:22pm
    No way will I use my phone for banking or shopping, there is far too much fraud without this extra one.


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