How will “Real Time Payments” affect payroll

With the introduction of “Real Time Payment” employees and employers want to know if the New Payments Platform (NPP) can be accessed for processing payroll. Here is what the Communications Strategist of NPPA has to say.

The New Payments Platform has been established to facilitate real time payments between bank accounts, whether it be consumer to consumer, business to consumer or business to business. The New Payments Platform’s combination of faster funds availability and enriched data capability can indeed be utilised by payroll providers and corporates to make payroll payments to employees.

While the initial focus with the platform launch is on consumer to consumer payments, participating financial institutions will gradually be rolling out services to their business and corporate customers and enabling the accounts of those customers to be reachable via the Platform.

Corporates and payroll providers have the potential to be able to send payment initiation messages to participating financial institutions in order for payroll payments to be made. Exactly how these payment requests are structured and handled is up to those financial institutions participating in the New Payments Platform.

Payroll providers and corporates interested in understanding more about how the New Payments Platform can be used to support payroll payments should talk to their respective financial institution or institutions.

So, knowing that NPP can be used for payroll will certainly pose some questions. For instance:

  • How secure is the platform to ensure that employer and employee will not fall victim to security breaches?

We believe there would have to be some sort of bank guarantee to warrant an employer taking on this facility. Imagine if a whole payroll run was “lost” and the crisis management necessary in this situation. Risk would no doubt negate benefit.

  • As most of the reporting and liability for payment through payroll is based on an “intended payment date”, will NPP affect this?

It appears that not all of the banks will be taking on the NPP platform, so therefore I cannot see how there could possibly be a change to the intended payment date system for liability and reporting.

If an employer chooses to use NPP then some employees may reap the benefit if their bank offers PayID and they take up the service.

There will undoubtedly be a lot of discussion about the New Payments Platform and whether it should be used in the payroll arena.

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