Ever wondered why it can take 3-5 days for money to ‘clear’ from one bank account to another with today’s technology? Turns out, transferring money and paying bills can be faster and still secure. Welcome to PayID.
PayID, also known as, New Payments Platform (NPP) Australia/Single Credit Transfers/Osko (for something so simple, it has a lot of names!), has been developed for and by Australian banks, to make sending and receiving payments simpler and quicker. That means real-time bank transfers… usually within 60 seconds.
And it’s not just the big banks who are getting on board – credit unions and second-tier lenders are joining the fast payment movement.
How does PayID it work?
PayID will become part of your participating financial institution’s normal mobile or online banking. It will help you make payments to and from the account of your choice without having to remember, find or share your BSB and account number. Or ask anyone else for theirs.
Your PayID is a unique number that you choose, that will be securely linked to your nominated bank account. It could be your phone number, your email or your ABN – you get to choose. Just check with your financial institution which options they offer.
Once you have created your PayID, the next time you want someone to pay money into your account, you simply ask them to pay it to your PayID. And if you need to pay someone else, simply ask them for their PayID.
How quickly will the money be transferred?
Provided the recipient is with a participating bank, the money arrives into their bank account within 60 seconds. Using the mobile app or online banking platform, both parties will see the funds arrive/depart in real-time.
Can I use PayID to pay my deposit at auction?
Going to auction is nerve racking enough, but to then have to go to the bank to get a bank-cheque for the 10% deposit, being charged for the cheque, then having to return the bank-cheque if you weren’t successful – and being charged again for returning it, a real-time fund transfer would be a welcome solution!
The most questionable process around auctions is paying the deposit straight after the hammer falls. Personal cheques can bounce, and existing bank transfers take too long. So, the only solution is a bank-cheque. And you may still have to make an additional payment if the sale price is higher than the deposit amount you brought.
Real-time bank transfers could enable buyers to pay the accurate deposit, rather than too much or too little on auction day.
At this stage, none of the banks or PayID have indicated if there is a limit on the amount of funds that can be transferred. It’s likely that in the first 12 months of the new technology there will be a fund transfer limit placed (approx. $1,000). However, if the roll-out goes well and the technology is well received, using PayID to pay your 10% deposit could be a real-time triumph!
If the transfer limit is increased, real estate agents should jump on board to offer real-time bank transfers by creating a PayID for their trust account.
Which banks offer PayID?
Only a few banks, CBA, Westpac & NAB, are starting to offer the new technology to their customers this week, and ANZ are going through further testing before they release it in the next few weeks. Most banks and credit unions are on board but will stagger the rollout over the next 6-12 months.
PayID has been developed and will be offered by most Australian banks, building societies and credit unions via the New Payments Platform. For a full list of participating financial institutions click here.
Pre-approved finance for auctions
Before you bid at auction or put an offer in on a property, always make sure you have pre-approved finance in place. Speaking with a mortgage broker like Mint Equity will ensure you know your borrowing capacity and how much you can secure as a home loan.