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BPAY is an electronic bill payment system in Australia which enables payments to be made through a financial institution's online or telephone banking facility to merchants who are registered BPAY billers.
BPAY is a registered trading name of BPAY Pty Ltd, a wholly owned subsidiary of CardLink Services Limited. CardLink is owned equally by Australia's four major banks. In 2005, BPAY was the only payment system in Australia that had an interchange fee that had not been subject to actual or proposed regulation.
Outline of the system
Merchants who wish to accept payment using BPAY must set up or designate an existing deposit account that will accept deposits and then register as a BPAY biller, usually via the merchant's financial institution's website. BPAY will then allocate the merchant a biller code. This biller code together with the BPAY logo and customer reference number must appear on the merchant's invoices.
To make a payment using BPAY, the customer must be registered with their financial institution for online or phone banking. They will also need to link to these facilities the account/s from which payments will be debited. To make a payment, the customer would go to their financial institution's website or phone banking system, which requires entry using some password or PIN verification system, indicate the biller code, the customer reference number, amount to pay and select the bank account to be debited. The merchant may restrict the type of accounts which may be used for making payments. These may restrict payments to saving or cheque accounts, or if credit cards are acceptable the type of credit cards (e.g., MasterCard or Visa cards only). Most financial institution's websites allow payments to be scheduled for payment at a later date, or to be periodical, and will allow the biller code and reference number to be saved for easy recall for subsequent payments.
The paying financial institutions will verify that the payment amount is available from the selected account and that the person using the service has used the correct PIN or password access. It will then issue a receipt which can be printed by the customer as proof of payment. If payment is made over the phone, a receipt number will be given. The financial institution will electronically transfer the authorized payment information - comprising the biller code, reference number, authorized payment amount, as well as other security information - to the merchant's financial institution which will credit the merchant's designated account.
Though the payment (debit) side of the transaction is generally executed electronically in real time, some financial institutions will wait until the next business day (which in some cases may span a weekend and public holiday) before sending out the payment to the biller's financial institution. During this period, which can be up to five days over the Easter period, gives the financial institution an interest benefit and also requires the biller to bring forward by five days the due date for the payment of their accounts. For example, credit cards typically advertise a 55-day interest free period, the other 5 days being allowed for the payment clearance. This practice has been criticised and is the subject of a review by the Reserve Bank.
The BPAY system was launched in 1997, becoming the world's first single bill payment service adopted across the banking sector.
In 2002 BPAY View was introduced. BPAY View is a bill payment service that delivers bills and statements electronically through Australian internet banking sites.
As of March 2011, BPAY payments can be made through more than 160 participating Australian banks, credit unions and financial institutions. More than 19,000 business accept payments using BPAY and each month approximately 26.84 million bills to the value of $19.09 billion are paid using BPAY.
The BPAY scheme sets an interchange fee, called the capture reimbursement fee (CRF), which is payable by the biller's (the merchant's) financial institution to the bill payer's financial institution. The CRF is a flat fee and differs depending on whether the payment is from a deposit account or a credit card account. The CRF in 2005 was $0.44 for payments from deposit accounts and $0.38 from credit card accounts. Also, when a BPAY payment is made from a credit card account, the biller's financial institution also pays a percentage of the payment value in addition to the CRF, which was 0.27% in 2005. A merchant can refuse to accept credit cards for payment of their bills. In addition to the CRF, the biller's financial institution pays a flat fee of $0.04 for use of BPAY View. Merchants (i.e., the billers) are usually charged for the use of BPAY by their financial institution. A merchant's customer is normally not charged for payments using BPAY, but some merchants do charge customers for payments from a credit card account.