Reliability of Payment Networks Under the Spotlight

We report all too frequently on payments system failures – see the end of this article for a recent example. But it is interesting that the Governor of the Reserve Bank of Australia (RBA) has recently chosen to draw attention to the performance and reliability of Australia’s new payments platform (NPP), particularly noting the need and priority of improving the ‘resilience of Australia’s payments and market infrastructure’.

NPP is run by Australia’s commercial banks, and they had been hoping to shut down the Bulk Electronic Clearing System (BECS) to drive traffic to the NPP. With the Governor highlighting NPP services as unreliable, experiencing frequent outages in terms of downtime, there is doubt that this will be possible, even by the planned shut down date of 2030.

The banks have recently launched Australian Payments Plus (AP+), creating a ‘utility’ domestic payments network. Federal, state and local governments have an interest in NPP replacing the batch-driven BECS direct entry system, rather than the instant payment-based NPP, because payrolls, pensions, tax returns and other revenue and rebates are managed through it.

The RBA monitors outage data, and the number and total duration of operational outages have risen in the last few years. The NPP services have been the least reliable. While maintaining BECS and NPP in parallel is an expensive duplication, with the current level of unreliability, moving solely to NPP is not possible. It doesn’t help that NPP is more expensive than BECS.

The Governor also raised the issue of whether NPP has the capacity to handle large transactional volumes. Salaries and welfare payments are, by their very nature, large transactions. Can NPP’s ‘line-by- line’ operational logic be made to work efficiently with bulk payments?

UK – HSBC outage

On Black Friday, the online shopping event, some of HSBC’s UK customers were unable to access online and mobile banking services. This meant that they could not authorise online card purchases. The failure began at about 7am, with hundreds of customers still complaining of issues by 4pm.

HSBC’s handling of the outage was interesting, starting with an apology and directing people to authorise payments with one passcode via SMS, with an assurance that updates would be shared as they were issued.

At 13.20, messaging was updated to say the outage was caused by ‘an internal system issue’. At 19.00, an update said HSBC knew Friday night was a time people headed out and that they should be confident in being able to pay and that account balances could be checked at ATMs. The bank said it was ‘working hard to get a fix in place.’ By the next morning, normal services had been resumed.