In business it is a common saying that cash flow is king.
The main situation that impacts cash flow for business is customers who don’t pay on time.
Even when customers do pay there is usually a delay in actually getting the funds in a state so that they can be used by the business e.g. Merchant settlements for EFTPOS or Credit card transactions or any transaction that occurs on a weekend.
Being part of Generation Y, I do not like waiting for things (in queues, deliveries in the post, etc) some call this being impatient where as I see it simply as frustration at poorly designed systems. Payment systems, for a long time have been a system of delays.
Whether it be pre-2000 needing physically go to the bank to withdraw/deposit money or now the delays that came with receiving money from someone electronically (particularly on a weekend!)
Osko is the name for the first product to be released using the New Payments Platform infrastructure. It facilitates real time payments between people and businesses using a pay-ID.
You might have seen your bank recently advertising the concept of a Pay-ID which is a simple method of linking a BSB and Account number to a Mobile number, email address or ABN (seriously who remembers someone’s ABN!). This does not remove the need for a BSB and account number a Pay-ID just points to it. This means you have the freedom to change banks (or just accounts) without having to advise each of your contacts of the change.
Using a Pay-ID payments can be made in seconds, no waiting until the next day to receive the funds. By the time you open your internet banking app the funds are there. Magic.
So what are the benefits for business:
- The payment process is easy, payments are instantly cleared which is fantastic for cashflow
- It allows for a 280 character payment description (You can fit an entire tweet inside a payment description!)
- Payments can be made instantly 24/7 – even on weekends! (I could see market stalls potentially using this instead of EFTPOS or Paypal due to the general lack of fees from this process)
- Business have the option share with customers a BSB & Account number or their PayID (such as a phone number or ABN) which the customer may already know.
- Bill splitting between customers will be easier – for businesses like cafe’s or restaurants that commonly have a problem with the additional fees charged when people pay separately.
BPAY suggest that service is also best suited to sole traders or micro businesses and that the product is still being built out.
The non-business uses for transfers between people are fantastic. Instantly repay a friend for movie tickets or drinks at a bar.
I have confidence that I will see innovative use of this technology from our clients and the business community at large.
Your bank will have instructions for linking pay-ID’s to accounts.
If you have more questions on Osko or just want a chat please give the office a call or drop me an email at luke@woottons.com.au.