Australia’s BECS migration: your questions answered

AusPayNet has set a target to retire the 40-year-old batch-based Bulk Electronic Clearing System (BECS) by 2030, when the BECS payment volumes will need to have migrated to the New Payments Platform (NPP). The move to modern infrastructure that enables real-time payments will allow Australia to compete globally, with the speed and data richness needed to drive efficiency, competition and customer service in a digital-first world.

Financial institutions, large corporates, and government leaders are now asking: what does this migration mean for us and how will we get there? This article answers the questions most frequently asked by our clients.

How significant is this transition?

Today, BECS processes around 90% of Australia’s payments – 3.5 billion transactions annually, worth more than $17 trillion. Retiring the system will affect a wide spectrum of payment flows that underpin daily life and business operations, including:

• Payroll: direct credit arrangements, responsible for over A$100 billion in salary payments each month that ensure employees are paid on time.
• Direct debits: regular deductions for mortgages, utilities, insurance premiums and other bills.
• Government disbursements: benefit payments, tax refunds and emergency relief.
• Superannuation: contributions and disbursements across Australia’s A$3.5 trillion super system.
• Supplier payments: business-to-business transactions critical to supply chains.
• Customer payments: recurring and one-off payments across industries.

The migration will require significant investment from financial institutions and service providers, with the cost of modernising infrastructure and preparing systems across the private and public sectors expected to reach hundreds of millions of dollars.

How will the change occur?

All players across the payments value chain, will need to assess the impact of the migration on their operations and align to make this change possible. Account access, batch processing and ISO 20022-aligned data and messaging structures are pivotal components of the migration that must be developed and standardised across the payments value chain. 

The most impacted organisations will be:

• Financial institutions: modernising back-end payment infrastructure, aligning services to the NPP, reviewing their payment functions and business models, and ensuring sufficient security and resilience is in place to support real time payments.
• Material service providers: uplifting file formats, adjusting workflows and integrations to enable real-time, data-rich payments at scale and that support their customer needs. This will be of particular importance to providers of ERP systems and other payment service providers.
• Large corporates and government: working with their financial institutions and service providers to understand the impact to them and shaping their own migration paths in a safe way that drives benefit for their organisations. 

What is the timeline?

In response to Treasury, the Reserve Bank of Australia (RBA) and the activities of AusPayNet and Australian Payments Plus, the industry is corralling to define a future vision, determine the migration case and path, and drive coordinated progress towards a migration from BECS. 

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Current efforts are focused on defining the vision, migration path and confirming key milestone dates for the transition. 

What are the opportunities?

Moving to a modern, real-time payment system will help organisations to streamline operations and improve the customer experience. Specific benefits will vary by industry and organisation, but the best way to identify and capture opportunities is to engage early and be part of the change.

Benefits across the industry ecosystem will include:

• Faster, more efficient and safer payments: real-time payments provide payment certainty, improve cash flow, reduce processing effort and may allow verification of the recipient before sending.
• Richer data for better decisions: consistent ISO 20022 data formats will make payment messages richer.  This will enable more efficient reconciliations, fewer errors, allow enhanced analytics, easier compliance reporting and opportunities for greater operational efficiencies.
• Real-time liquidity management and transparency: real time payments enhance treasury function's ability to optimise position management, more efficiently manage cashflow and make smarter decisions on how best to deploy surplus funds.
• Reimagined customer experience: real-time services align with today’s customer expectations, driving competition and efficient experiences while improving trust through instant payments and confirmations.
• Opportunity for lower costs compared to card payments: for many use cases, the opportunity to use NPP payments and products like PayTo, may be cheaper than card payments, helping businesses, especially high-volume ones, avoid costly interchange fees.

What are the challenges?

Australia is taking a unique path with an intention to retire its batch-based BECS system altogether and transition entirely to the NPP. This presents a complex set of challenges: 

• Achieving a common vision: the development of an end state vision with a shared roadmap and delivery approach is a key enabler for BECS migration and is already underway. The payments value chain is currently fragmented and change will require the coordination of many players including schemes, banks, ERPs and payment service providers through to their customers and end users.
• Quantifying benefits: migration will require significant investment and operational shifts for banks, ERPs and participants across the value chain. Quantifying benefits, such as faster reconciliation, richer data, reduced operational risk and improved customer experience, is complex but essential to building confidence and momentum for change.
• Uplift of NPP in preparation: the NPP was not originally designed to handle the volume, diversity of payments or batch processing requirements currently handled by BECS. It is now being enhanced to address these needs, with planned improvement in capacity, resilience and functionality.  Industry confidence will therefore be essential to drive volume to the NPP and prevent operational inefficiencies, dual-system complexity and disruption while BECS is decommissioned.
• Uplift of risk environment: real-time payments introduce different risk profiles, likely requiring pre-emptive changes to fraud management, operational resilience and data quality controls. Financial institutions will need to build real-time responses into their risk framework, and all impacted organisations will need to consider the uplift required to their own risk and control frameworks.
• Ensuring sufficient capacity: to support the current BECS payments on NPP, industry participants like Australian Payments Plus, banks, ERPs and some service providers will need to increase the speed at which they can process the required volume of payments, and monitor this over time. While this work is well underway, it will need to be proven to give the necessary confidence for migration.
• Learning from global experiences: the UK has previously struggled with a lack of clear governance and alignment on the future model, which created significant delays and rework, and a continued reliance on incumbent payment rails. While Australia has overcome these, the continued industry collaboration, clear governance and common outcomes are required to ensure success.

What happens next?

In the coming months, further information will be released about the path to BECS 2030. Meanwhile banks are continuing to ready themselves for a real-time world, payment service provider roadmaps will continue to be developed and refined, and end users will begin planning their own migration pathways and future payment experiences. 

Being prepared, working out where value lies for your organisation and understanding your dependency landscape will ensure you’re able to migrate smoothly and maximise benefits as you go. 

How Baringa can help

We’re working closely with organisations to navigate this complex and critical shift, helping them plan proactively to meet regulatory requirements and unlock broader strategic value from this once-in-a-generation opportunity. While compliance may be the catalyst, it’s the wider opportunities that are shaping the true scope of transformation. 

With deep global payments expertise and significant experience in UK payments modernisation, Baringa brings a unique blend of local insight and global experience. Our Australian Financial Services and Government advisory teams, combined with our technology and risk capabilities, are well placed to help you shape your strategy, uncover opportunities, and deliver lasting value from change.

If you'd like to discuss this topic or any of the points mentioned, please reach out to our team.