Australia

Direct debit's days could be numbered

The days of direct debits being too awkward to cancel could soon be over with proposed changes to Australia's instant payment systems.

Cancelling a pesky direct debit gym membership could finally be easier under proposed changes to Australia's electronic payment systems.

The New Payments Platform, owned by 13 major banks and financial institutions and backed by the Reserve Bank, has had a slow rollout but a new research paper says changes to direct debit are coming.

Under the current system, direct debits are set up and continue forever until one party cancels them - which isn't always an easy process for consumers.

But a report published this month suggests the direct debit model can be flipped to allow customers to approve the transactions.

That could mean the end of those regular memberships, subscriptions and charity payments that people find too awkward to cancel.

"Many real-time payments markets are starting to move away from traditional debit style 'pull' payments, towards a 'push' payment type, or credit transfer," the NPP research paper says.

"This allows the customer greater control over the timing, the amount and the regularity of payment."

The "request for payment" model would mean customers could approve each payment, or set up an ongoing authorisation for a regular payment, which they could cancel online at any time.

The New Payments Platform is already being used by the big four banks and a number of other financial institutions to allow real time transactions and payments.

Centrelink used it to make real time payments during the Townsville floods in February, distributing $2.2 million in disaster recovery payments.

In June the Reserve Bank released a report praising the NPP's functionality but criticising the big banks for their slow rollout of services.

"The slow and uneven rollout of NPP services by the major banks has been disappointing and (this) has likely slowed the development of new functionality and contributed to stakeholder concerns about access," the central bank said.

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