The New Payments Platform, set to go live this year, will change the way businesses and individuals make electronic payments.

Good bye cheques

It’s one of the most important pieces of public infrastructure so far this century, but most people haven’t heard of it.

It’s called the New Payments Platform or NPP and, after several years in the making, it’s finally going live soon after Australia Day.

When it does, you’ll be able to make “real-time” electronic payments to other Australian bank accounts – meaning the funds arrive within minutes. You won’t even need to know the recipient’s BSB and account number, just an email address, mobile number or their “PayID”.

When politicians talk about infrastructure, they usually mean projects requiring physical construction – roads, railways, bridges, tunnels, airports, stadiums, convention centres, the NBN, Snowy Hydro…

But for my money, the NPP will be far more transformative for the Australian economy than most physical infrastructure.

For starters, faster payments will reduce a lot of the friction with transactions, not only between businesses and their customers but also between individuals.

Currently it usually takes about two days to transfer money to an account at a different institution, which is a huge disincentive.

Fast payments between institutions should reduce our need for cash, and put the final nail in the coffin for cheques. On a night out with friends, you’ll no longer have to go out of your way to get cash to pay for your share of dinner or the babysitter back home.

ou’ll be able to buy secondhand goods, including big purchases such as a car, or pay tradies with far greater confidence and convenience for both buyer and seller, even on weekends. Eventually even house hunters may be able to ditch the chequebook – currently they need one handy in case they want to bid at an auction.

That greater efficiency should have an economic pay-off.