Osko by BPAY: Sharing Insights

Osko by BPAY is starting to take shape with 400,000 transactions per day growing to an estimated 1.5 million transactions by March 2019. Customers’ expectations of immediacy are rising, they expect payments to be easy, convenient, without delay and to anyone they want to pay. PCN Associate Catherine Batch chats with Cathie Morrison the Business Lead for Osko by BPAY, who answers questions about the journey to date.

Q. Is cash still king for transactions under $20? Or has this changed?

This has significantly changed and is still changing. For Osko® payments, around 12% of transactions are under $20 and we expect to see that continue to grow as Osko becomes even more widely available. Osko payments is currently available in over 60 financial institutions – which is around 65% of consumer transaction accounts. This is continuing to steadily rise as it is rolled out to customers by more participating banks, credit unions and building societies.

In a country where almost 90 per cent of the population own a smartphone, there is a real shift in the way we transact money and Osko is certainly enabling and even accelerating this shift as consumers are make more digital payments and fewer trips to the ATM for cash. Statistics published by AusPayNet show that consumers made around 23 million electronic transactions a day in 2017 (and growing) but the number of ATM withdrawals made fell 5.9 per cent.

Q. What is the average size of Osko transactions?

This varies depending on the parties involved in the transactions. 74% of Osko payments are what we would call social payments, between individuals, the typical transaction is $25, highlighting Osko filling the role of cash in low value transactions. For business payments the average Osko transaction value is higher though typically under $1000.

Q. Is there any data on the use cases, i.e. split payment of a restaurant bill?

Our research shows a pattern for low value social payments made fairly consistently every day of the week – whereas business payments are primarily done Monday to Friday. Insights from our research show that the social uses for Osko are primarily for paying back friends and family. That might mean splitting a restaurant bill, paying someone for a group purchase (e.g. concert tickets or a gift for a friend) or also emergency funds for family.

Q. Is Osko replacing cash or traditional card payment or DE payment or traditional BPAY?

Consumers are driving the change in the payments landscape. This change in expectation by consumers leads them to wonder why should it take up to 3 days for me to transfer money between bank accounts? and with Osko it doesn’t – funds are available to the Payee in under a minute. Osko is helping to accelerate the shift away from cheques and cash, as well as other electronic transfers (DE) between banks, where consumers have an expectation of immediacy.

Q. In your view what are the other overlay services to watch?

Well Osko Requests of course! But I think there will also be a number of new overlay services over the coming years that will solve for particular niche verticals, creating better overall experiences by embedding the payment more easily and quickly into the end to end commercial activity. These may not be as shiny and extroverted as Osko – lol! – but they will create a great impetus for the continuing transformation of the Australian digital economy and bring real benefits to businesses and consumers alike. The industry has ambitious plans for additional NPP functionality, with an API framework with three sample APIs announced last month.

Q. Will open banking bring international competitors?

Quite likely! Open banking has already been established in other regions, and so international competitors may have new services or products they can bring to market quickly here, which may even accelerate the realisation of open banking benefits. Win-win. It is exciting for the whole industry that the innovation competitors both local and international will bring in providing new ways to exchange value. Osko has a unique position, being inside existing digital banking channels, the place where people already manage their finances. Our position is one that few organisations have the privilege of being in.

Author: Catherine Batch, Research Director, Payments Consulting Network.