Payday super shouldn’t be on Australia’s fast payment rails: GNGB

Policymakers should reconsider the requirement for Payday Super to be run through the New Payments Platform (NPP), with warnings sounded over unresolved gaps in the fast payments rail’s functionality and untested B2B payments capabilities.

Super industry payments and data standards authority the Gateway Network Governance Body (GNGB) has urged the Government to delay the addition of Payday Super to the NPP, allowing “more time to mature and develop sustainable solutions”.

Payday Super, set to be enforced from July 2026, will require that employers pay their employees’ superannuation at the same time as their salary and wages, with penalties for late or missed payments.

Treasury is currently undertaking consulting on draft legislation for the Payday Super scheme.

The existing Bulk Electronic Clearing System (BECS), the batch-based payments clearing and settlements system, is planned to be decommissioned in 2030, with the NPP to serve as Australia’s sole payments rail.

The NPP currently handles just over half the transaction volume of BECS (1.7 billion vs 3.5 billion) and just over one-tenth of its transaction value ($2.0 trillion vs $17.4 trillion).

With the decommissioning of BECS, Australia would be one of the few jurisdictions in the world operating just a single payments rail.

The GNGB, in its rebuttal of the fast-tracked adoption of the NPP as the Payday Super transaction network of choice, cited the Reserve Bank of Australia’s (RBA’s) recent risk assessment report, highlighting that the NPP’s ability to handle business-to-business (B2B) payments has not been properly vetted.

The report noted that migration of BECS transactions to the NPP would demand “significant uplift across the NPP’s central infrastructure, scheme rules and its participants’ capabilities”.

“The NPP offers greater functionality than BECS, but would require significant development before it could process the majority of BECS payments with an equivalent level of safety and reliability,” the report read.

Particular concern was raised over the ability of the current NPP system to handle bulk payments, with the report flagging the need for a significant uplift of both payments participants’ and the NPP’s infrastructure to support this capability.

The paper also acknowledged industry concern over the relatively brief timeframe to migrate to the NPP, noting that the target date should be subject to “ongoing evaluation” and may require postponement for bulk payments made by businesses and government.

GNGB chief executive Michelle Bower expressed concerns over the acknowledged “gaps in functionality” between the NPP and the more than 30-year-old workhorse BECS.

“There is much work to be done before we can even make a sensible assessment of the NPP – or alternatives – to ensure super payments can continue to be efficient, cost effective and reliable,” she said.

Bower fears that the “breadth of work” required to assess and ensure the suitability of the NPP for superannuation payments would likely not be completed by the proposed PayDay super introduction date of July 1, 2026.

“The super ecosystem is vast, with millions of participants, and we need to assess any changes to payment systems from each of those perspectives in a balanced, independent manner.

“At GNGB we have been working with a cross-section of super ecosystem participants since this measure was announced, and we’ve identified payments as a core issue that must be properly considered before any changes are made, or we risk the integrity of the entire Australian retirement savings system.

Bower urged policymakers to allow more time for the NPP to “mature and develop sustainable solutions” to the concerns highlighted in the RBA report before mandating the inclusion of Payday Super.

As at the end of 2024, super funds were handling more than $37 billion in employer contributions per quarter, equivalent to more than $129 billion for the year.