Changes to the banking sector

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This week’s column centres on the new payments platform which launched in Australia on Tuesday.

While not exclusively a legal issue, the changes will have ramifications on how Australians do business and will streamline a number of legal processes that centre around cross-bank transfers and payments of large sums of money.

This will give regular Australians and businesses the ability to:

• Instantly transfer money between accounts at different banks, credit unions and financial institutions without the usual wait times

• Process immediate payments at any time of the day outside business hours

• Include more detailed descriptions in relation to EFTs

• Streamline identification processes by introducing a “Pay ID” that will allow you to see the name of the business or person you are paying as opposed to some obscure company name or other identification.

In a media release put out by New Payments Platform, the entity behind the reforms, the company indicates that people will be able to make payments across entities in under a minute with all of the usual security of online banking.

On a personal level, it will mean that payments can be made to people and service providers instantaneously so things like babysitting, purchasing second hand goods, and paying for professional services like lawyers fees or accountants fees.

From a business perspective in the legal sector, it is also likely to streamline the conveyancing process which is already in the process of moving to an online platform.

This means that rather than a bunch of people spending an hour in an office boardroom in the city swapping cheques and documents to affect a simple conveyancing transaction, things like paying the purchase price for a property, discharging mortgages and paying house deposits can happen instantaneously online.

The concept of the “Pay ID” is also aimed to make payments simpler as it will enable people to pay one another without use of a BSB and account number. While all of that important security information will be attached to the Pay ID, the days of completing an account name, BSB and account number by hand for individual transactions will shortly be a thing of the past.

It is reported that Australia’s four major banks, the Reserve Bank of Australia and a large number of other additional financial institutions are already on board.

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