00:00

Kylie Davis

Welcome to the Prop Tech podcast. It's Kylie Davis here and I'm delighted to be your host as we explore the brave new world where technology and real estate collide. It's so great to have you here and to share stories of innovation and opportunity across real estate, property and building services. The aim of each episode is to introduce listeners to a Prop Tech innovator who is pushing the boundaries of what's possible across how we design, build, buy, sell, rent and invest in property and all of the associated behaviour and activities around that. Now, none of this would be possible without our sponsors, so a big shout out to the Direct Connect team, making Moving Easy dynamic methods, the innovators behind the forms, live and Real works forms, and the Proptech Association of Australia. Thank you for your support of the podcast. In this episode of the Prop Tech Podcast, get ready for a deep dive into the world of payments. 

01:01

Kylie Davis

My guest is James Foster, CEO of Ezypay, a man whose depth of knowledge of the history and the future of the Australian payment system is matched only by his passion. And it's pretty extensive. Now, in this podcast, James explains the legacy of the current payment systems, the pain that they cause for property, renters and buyers, not to mention anyone paying all of those bills that come with living in a property. The new world of pay, too, which is about to revolutionise how we all make regular payments. We also look at the work that Ezypay is doing with partnerships in the Proptech space to speed up adoption. So, here to tell us all about it, James Foster. Welcome to the Proptech podcast. 

01:43

James Foster

Thanks, Kylie. It's great for you to have me here. 

01:45

Kylie Davis

No, thank you. So, James, we always start off with an elevator pitch, and I know that you're not strictly a Prop Tech, but what is the Ezypay? Elevator pitch? 

01:56

James Foster

Sure. Always a challenge, I think, for CEOs to compress everything, because we want to take 20 minutes and it's going to be elevator ride in the world, right? Maybe we're in Dubai and getting in a really slow lift there. I mean, fundamentally, we say that we're a subscription payments company. Now, that word subscription is pretty loaded, so generally I say we're a payments company that helps businesses that have some form of ongoing relationship with their customer. That's my way of getting around having to use the word subscription. Instalment, recurring, direct, debit, all of those words are valid, but they're all loaded with different meanings depending on the industry or the geography. So, I mean, we're a 27 year old business, we started out in Australia, we're privately owned, still are privately owned. The founder of the business still owns the business, which is fairly unique in this space. 

02:59

James Foster

I guess in the modern parlance, we would call ourselves a scale up rather than a startup. 

03:03

Kylie Davis

I think in 27 years, you'd be actually established, I think, in 27 years, under the Project Association guidelines. 

03:14

James Foster

I think particularly with fintech, because, again, we do associate more in the financial technology and in fact, there's actually a subset called pay tech. Now for payment, there's something tech for everyone. I think really the reason why we say we're not established is because clearly there are mega huge, massive organisations, and particularly in the Australian market, they're traditionally the banks. Banks have traditionally been the ones that have processed payments and have been payments companies. Really, by saying we're not established, we're just saying, hey, we're not one of those guys and they have their value. Although we're established, we're still relatively small and driving innovation. We've just hit 100 staff, which, depending on your point of view, can be big, but again, compared to a bank, it's very small, so we still move pretty quickly, we're nimble, we are very aggressive on innovating our technology platform. 

04:14

James Foster

I guess that's why I pushed back pretty hard on the established bit, but I'm trying to have my cake and eat it too, I think, because in payments we want to say, hey, look, 27 years, we've got experience, we can be trusted. Sometimes there are challenges in payments and financial services more broadly with startups not lasting and the concern around trust and what that means. Obviously we do lean on that 27 years of experience, but we don't want to get tagged with being slow and cumbersome and having old technology. So, anyway, our dean, the elevators finally stopped. 

04:49

Kylie Davis

Maybe it's like different gestation periods, depending on what industry you're in. Maybe in tech you're more elephants than humans. Before you become an established supplier. 

05:04

James Foster

Everyone tries to pitch. I know we've done some work and I know you've had David from MRI on the podcast. They have a bigger challenge in that space of, again, trying to position the fact that, again, they've got a long history and they're a large organisation, but are still trying to do innovative things. We've all got those similar challenges, regardless of the industry that we're in. 

05:24

Kylie Davis

Yeah. Now, look, I'm curious because I don't know much about this space at all, but if I'm running a subscription business, why do I need a special solution like Ezypay? 

05:36

James Foster

Yeah, no, it's a great question and obviously one that I get asked all of the time before we jump and talk more about the specifics in the property space, I use just a common analogy of buying something online. If you're a merchant or a business sorry, I use the word merchant because I'm in payments too much. If you're a business and you're selling something online, payments is actually a pretty easy and straightforward thing. I think that's the problem is that in our minds, that we always think along those lines and what do I say? It's easy. Obviously, if you're trying to pay for something online, how much it is. You've got your payment details on you. If you're paying by credit card, your card hasn't expired, it's valid, how much the TV or the shirt or the shoes or whatever it is you're buying online is, how much money you've got. 

06:27

James Foster

There's really limited scenarios in which that payment is going to fail. Right. So it's pretty straightforward. Now, if it does fail, obviously, from the business's perspective, it's really straightforward. I don't send you the product, right? You haven't paid for it, I'm not sending it to you. It's really easy. Right. That's, I think the context on ecommerce payments or even point of sale payments that people align themselves to, hey, payments just is really simple. Right. Why is it hard? Whereas when you start talking about subscriptions and as I said, it's this ongoing relationship, and before we talk about property, I'll talk about gym membership, because, in fact, that's where we started 27 years ago. Our founder Randy's own gym business and really struggled moving. He was one of the first operators to move from a pay upfront model to pay as you go model, which sounds funny because as an Australian, we're all used to, why would you be paying twelve months gym membership up front? 

07:21

James Foster

That's just crazy bananas. No one does that 27 years ago. That's predominantly how people paid. I should point out in Asia, which is where we're in as well, is that's still the predominant method for people to pay for their gym membership is upfront point of sale. Twelve month gym membership. Wow. If you move to that situation where you're paying as you go, so you sign up to your gym membership. Month one is fine, month two is fine. Month three is fine. Fast forward it's now 14 months later and your payment fails. Well, for starters, in that subscription space, or what we refer to as a merchant initiated payment rather than a customer initiated payment, there's lots of reasons why the payment fails. Your card could have expired. You could have lost your card and gotten a new card. You could have closed that account and moved your account somewhere else. 

08:12

James Foster

The number one reason actually why it would fail is because you didn't have enough money in the account. You forgot that on the every second Tuesday of the month that your gym membership comes out. That's an increasing problem, particularly in the Australian market. So, again, if we go back 1015 years ago, people had one bank account where their salary got paid and one credit card. Really simple. On average, in Australia today, most adults have at least five transaction accounts. If you're like me, you'll have maybe one main account where your salary gets paid into, and then you've got a debit card and a separate account that you use for paying your bills or for weekly expenses or an offset account. You move your money around into those accounts. It is that challenge where there's not enough funds, right? Bottom line is that there's a lot of reasons why subscription payment will fail and then as the business owner, it's a lot more complicated. 

09:16

James Foster

What do I do when that fails? Right? Again, if I just go back to my simple gym analogy, do I instantly cut off access to the gym? Your payments failed. Do I just disable your access pass? Again, most gyms these days are 24 hours. Kylie, you've had a hard day running the Prop Tech Podcast Association and you're going for your party workout at 11:00 p.m. At night, but you can't get in the door because unbeknownst to you, payment failed 2 hours earlier and they've shut you out. That's not a great customer experience. Okay, well, if I don't do that, what do I do? Do I rebuild you. Do I rebuild you the next day? Do I just wait till next month and charge you twice? But then that's a larger amount. If I'm charging you the next day and it fails, how many times do I keep going? 

10:00

James Foster

When do I communicate to you? Right? There's a lot of these intrinsic challenges of how to make that payment successful and how to do so in a positive customer experience. Because this is the other big challenge that we've seen in all of the industries that we focus on is that customer experience. Because the other approach, the old approach and some of our competitors take is if someone then picks up the phone and calls you and says, hey Kylie, you didn't pay for your gym membership, you're deadbeat. Where's the money? That's a really negative experience for you as a customer versus an alternative, which is automating. That solution is if you got a text message and said, hey, your payments failed, click here to retry or click here to update your payment details. It's a much more improved customer experience. You don't feel as bad about it. 

10:51

James Foster

It's automated. It also saves time for the business owner because they're not having to chase their customers up and missed payments. This is the really important thing, I think, in the world of subscription payments, is missed payments and is not a debt. I really hate that terminology about bad debts. We talk about debtors, right? I'm starting to get into the world of proctek more and rent rolls. We talk about debts. It's not a debt, it's a missed payment. I haven't deliberately not paid. Fair enough. There might be a small percentage of situations where a customer is deliberately not paying because they don't want the service or they're in dispute. The vast majority, it's just a missed payment. It's a missed payment. If you treat it like a debt, it's inefficient, it's ineffective. So, again, what we try to do is automate that collection. We're improving the actual collection outcome for a business owner and we're improving the customer experience at the same time. 

11:48

Kylie Davis

Cool. How does this work in the property space? 

11:53

James Foster

Yeah, it's a good question. I think I alluded to the fact that we started out in other industries, so health and fitness has been a focus for us for a long time. We also have focused on education and childcare, again, common spaces where there is those subscription payments and needing to automate. What we also realised, what we also built quite a long time ago is not just some advanced capability in the billing space, but also in the settlement space. So actually paying businesses out. That actually came initially for us because we did a lot of franchising in the health and fitness space. You've got these complex relationships between a gym owner being a franchisee and the Master franchise, Ore, and what that relationship tended to look like and how we needed to move money out when we settled to the business owner. What we started to realise is those capabilities of automated billing and advanced settlement were a really good fit for the rental payment space. 

12:56

James Foster

I think the rental payment space, particularly in the Australian market, has been really slow to change. It is still mind boggling just how stuck in the 1980s most rental payments systems are. Right? I think what also accelerated things for us is that we've moved to a model of not just building our own solutions, but really working with partners. In the last, particularly in seven years of our 27 years history, we've really focused on building our platform out to support software platforms to embed our capability. I think what we've seen, obviously in the proptech space is there's a lot of new players that are entering to try and disrupt the traditional property management. Whether or not it's trustless or whether or not it's just a different approach is there's a lot more software providers that have entered that space and they've been looking for payment partners to embed a payment capability and so that really opened our eyes to the huge opportunity in this space. 

14:01

James Foster

Over the last number of years we've been steadily focusing on rental payments in the prop tech sector more broadly and getting some new partnerships and being able to get some traction in that space. It's still early days for us. There's still a huge amount of potential, but it's really been that capability of us realising that, hey, there's a market need. When we really dig into it, I think it was really surprising, particularly for me personally, just as I said, what huge inefficiencies there are in rental payments, particularly in the Australian market today. 

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16:00

Kylie Davis

I've got a whole pile of questions around that. The first one is, why did you pick the 1980s as you think that's when acting well, no, serious question. What are the characteristics of it that flag it to being backdated back to them? 

16:16

James Foster

Yeah. Okay. So I guess two things. Direct Debit as a product feature, as a capability, was built in the EDGs, right? It's been around for a long time. 

16:28

Kylie Davis

My dad was very excited about online or Internet banking. Phone banking. Phone banking. That's what it was. 

16:34

James Foster

Yes. The funny thing there is and I'll try not to get too payment nerd on you during the podcast, but I think payments is one of those things that we all are impacted by it. We all use payments every day, right. We just tend to not know how it works under the covers. Whenever I talk about this stuff, people go, oh, is that why maintenance banking looks like that? Or how payment works, et cetera? Technically, and this is also an important topic because I think Direct Debit was created. Now, Direct Debit is built on a system called Direct Entry, and Direct Entry does both debits and credits. It actually runs on a system called Bex. The bulk electronic clearing system. There you go. I'm getting super nerdy on you. That was built a very long time ago. Direct Debit was designed for a pull payment. 

17:32

James Foster

A merchant to be able to take a payment out of someone's account with their permission. Right? Now, the challenge is, back in the 1980s, that permission was a piece of paper called a Direct Debit Authority, a DDA, right? We're all still familiar with that concept of agreeing to a Direct Debit authority. And in most cases, that's gone online. I should still say, still incredibly paper based, which drives no, I was going to say it. 

17:57

Kylie Davis

It's still on a piece of paper that gets maybe emailed to you these days. 

18:01

James Foster

In a lot of cases it shouldn't be and it doesn't have to be. We can talk about that. The funny thing is that terminology, what they did a great job of was branding the name direct debit. Direct debit. Direct debit. Direct debit. Everyone in Australia knows the term direct debit, in fact, too much. What it's become a shorthand, is when people say, I paid by direct debit, what they're really saying is they pay by their bank account, they pay by bank transfer. Funnily enough, if we actually look at rental payments in Australia, the majority of payments are actually a tenant initiated EFT. So electronic funds transfer. What I would say whenever anyone asks me, and again, I bore everyone to death these days. When I ask them, do you rent? And they say yes. I say, how do you pay your rent? And they say, direct debit. 

18:54

James Foster

I don't leave it at that. I say, what do you mean by that? I said, do you have in your internet banking a schedule set up that you control where you're transferring money to another bank account on a regular basis? And they say yes. I say, well, that's not direct debit, okay? That's electronic funds transfer. The important part there, Kylie, is that it is tenant initiated. They're in control of that. All right? I know I'm flipping around here but fundamentally that's one of the biggest problems that we see with any customer initiated payment, even with that regularity, because this is just and by the way, this is my classic question, right? Let's say you are paying your rent, Kylie, and you've entered into an initial twelve month lease and you've been provided a BSB and an account number that you've got to pay into on a fortnightly basis. 

19:50

James Foster

Right. Now, when you're setting up that transfer in your internet banking, you're always given a couple of options. It'll say keep going. Either a certain number of times, you can say do it ten times on a specific end date, or continue until you cancel it. Right? 

20:13

Kylie Davis

Yeah. 

20:14

James Foster

Now, you've just entered into a lease agreement for an initial twelve months. Which one of those buttons are you going to choose? 

20:23

Kylie Davis

Are you going to choose the time so that you don't the date and. 

20:26

James Foster

It'S going to line up with your initial lease agreement and what you're going to say to yourself is, I'll probably be sticking around for longer than twelve months, but at the end of my lease, I'll just remember magically to log in and update it. Yeah. You won't. Right. So you won't because it's human behaviour. Right. What I would generally say is, again, that's about control. Most people, they don't want to just say, keep on forever, because they'll say, I might forget and pay too much, I'd rather pay too less. That's an interesting challenge, but that is then different to direct debit. Direct debit, set up in the 1980s based upon Becks, a couple of real challenges with direct debit in Australia, it is not real time. Right. The magic waiting three days is because of, fundamentally, how the bulk electronic clearing system works. When we submit a file for processing, there is a service level agreement that all banks adhere to that they have to take that money out within three days and if it's unsuccessful, they have to send a failure response within three days, which is just crazy. 

21:34

James Foster

Right. Again, it's 2023. Even people that aren't doing tenant initiated EFT, the bulk of it is running on direct debit. The downsides with that is we can't control when it comes out. If someone wants to pay on a Thursday, we can't guarantee that we'll submit the file on a Wednesday night, it might come out on Thursday, it might come out on Friday, it might come out on Monday. The other big challenge with that is, as I said, we have to wait three days for the funds to clear and more importantly, three days to find out that it's failed. Again, a tenant wants to pay on a Thursday, we submit the file, we find out on a Monday that it's failed three days later. Then we've got to retry the payment. Again, we're waiting another three days. Right. About six business days. Right. A week has gone past before it's failed. 

22:21

James Foster

Again. So, fundamentally, direct debit, and there's a bunch of platforms and systems that have fancy names like Desk, et cetera, are all built around this archaic platform for moving money. 

22:37

Kylie Davis

Is Bpay built on that too? 

22:40

James Foster

Bpay runs on direct entry, so again, direct credits move a bit faster. So paying people. Yeah, now Bpay is different because it is designed as a customer initiated payment, so it is up to the tenant to pay. It is not real time what Bpay was good at. Again, I know we're jumping all around the place, but it helps solves one of the challenges with rental payments, which is reconciliation. You want to make sure that your customer pays into the right account and you need to be able to know who that payment came from. So, again, you can do that with EFT. Please use reference number 46742. Right. And here's the Bfb and account number. Now, the challenge with EFT payments is the tenant could either pay for the wrong account or they could put the wrong reference number in and that's going to cause you grief. 

23:44

James Foster

Bpay solves one of those problems with the reference number because they've got a customer reference number, which means something. Even then, it still relies on the tenant getting that detail right. It replaces two things, a BSB and account number and a manual reference number with a bill of code and a customer reference number. It's still relying on the tenant to get that data entry. Right. It's also still relying on the tenant to pay when they want to pay. Fundamentally, as a subscription payments company, that's why we say customer initiated payments are evil, they're horrible. They are not in the favour of a business, so they're not in the favour of a landlord, they're not in the favour of a property manager, they're not in the favour of a gym owner, they're not in favour of anyone wanting to get paid. They are the enemy. They are the devil. 

24:46

Kylie Davis

Using Ezypay plugging into whatever property management CRM system I'm using or whatever. What is the experience of a tenant or a renter in that space? 

25:00

James Foster

Yeah, good. 

25:01

Kylie Davis

I'm trying not to use the word tenants on the Prop Tech podcast. I'm trying to discipline myself to use the word renter because tenants is a word based in the 1600s or something. 

25:10

James Foster

Back in the yeah, just like merchants, as I was using merchant. 

25:14

Kylie Davis

Right. And landlords sailing out. 

25:23

James Foster

It's a really good question, I think, on a couple of fronts. Right. So, although we are unashamedly on this side of the landlord, the person wanting to get paid, so we care the most about them, right? Having said that, there are lots of benefits for the tenant or the person needing to pay. Okay. For us, there's a couple of things. One, we do make it easy for them to change their payment method if they want to pay by debit card or credit card or bank account, or change their bank account, because we're sitting in the middle and because of the tools and the platforms we have in place, we can make that easy for them. Right. Again, it's not this hard approach. By the same token, if the landlord changes their account, like, think about property managers changing their trust account details. What a nightmare. 

26:13

James Foster

They don't want to change that because they've got so many tenants hard coded paying into that account. We make that flexibility on the tenant side to be able to change their payment details. Right. Again, I think there was an aborted attempt a long time ago with rental rewards and pay by credit card and the ridiculous rates and what does that mean? Outside of that, it's not just about accruing points. Again, if we look at these days with the rise of debit cards, people don't know what their BSB and account number is. They've got a debit card attached to that and that's how they want to pay. So, flexibility for the tenant. What I would also say, and this is the interesting thing, so I talked about control before, right? Again, to that analogy of I'm controlling an EFT payment I want to set it up in a regular basis, but I want to have control over it. 

27:04

James Foster

I didn't want to say going forever, I want to be able to stop it. I want to have some control. By the same token, as a tenant, I've set that up because every fortnight I don't want to have to log in and manually pay it. Which is also why Bpay is not a great solution. Again, if you look at subscription payments, if Netflix manually asked you to enter your payment details every month, it would drive you crazy, right. So it's about getting the balance, right? Most people want the convenience of just take my payments, but they do want control, right? That's where we try to have that balancing act. We work with a lot of our partners to say we'll allow a tenant to set up their payment details, but we give them the ability to come in and say, stop or change my payment details, or I've changed accounts, or put a pause on that. 

27:55

James Foster

Right? Again, that's about balancing out their requirements. That's a big benefit that we have for tenants. It's just making their life a lot easier from that perspective. 

28:04

Kylie Davis

Some of the rental payment systems that are out there at the moment involve charging renters and tenants for credit card fees and things like that. Is that part of it, or how. 

28:22

James Foster

Do you yeah, it is. That's a really good question. I think, and to be honest, right. I think coming back to my negative commentary on the state of payments in the prop tech space, a big part of that has come down to the regulation, the good old rule in most jurisdictions where as a landlord, you need to offer at least one fee free payment method. Yeah. Now what that's resulted in is a lot of horrible situations is like, yeah, you can come to our office and pay in cash and we won't charge you a fee. 

28:55

Kylie Davis

Well, some offices won't even take her anymore. 

28:58

James Foster

It's also coming to that situation, to be honest, which is why people have said, oh, well, if you transfer to our bank account, that's free, so we can offer that and it's free or as well coming back to direct entry. I just said, hey, what's the bad things about direct debit? It's slow, it's cumbersome, but it's lower cost. What has happened as well is that people would say, okay, because we have to offer one fee free payment method, the landlord or the property manager or the platform will bear the cost of that, but that's all we're going to offer. We're obviously not going to offer card payments because they're more expensive, right. That's going to eat into our margin. What we're able to do, and others do as well, to be honest, is that flexibility of who pays the fees. So in those situations. Where you want to say, hey, look, you can pay by direct debit and it doesn't cost you anything more. 

29:54

James Foster

If you want convenience, Mr Tenant, of paying by card, then you have to pay the processing fee. 

30:00

Kylie Davis

Right, okay. 

30:01

James Foster

Again, it's that choice from that perspective of giving them that flexibility. What we've seen in our work so far is that if you actually do give tenants the choice, a lot of them don't mind paying. Tenants don't like being forced with something in some situations, but if you give them the choice and there are obviously benefits for them around that, then they're often happy to do that, as long as it's transparent and visible. 

30:27

Kylie Davis

Okay, so who are some of your partners that you're working with? Can you give us a shout out to some of the companies that are using you guys? 

30:36

James Foster

I can. A couple, and this is where I'll do the usual. We are working with quite a few that we can't talk about yet because there are certain stages where they don't want to announce or tip there too much, and that's sometimes frustrating. I think working in that startup space is everyone wants to be in stealth mode and doesn't want to talk about it, whereas we want to sing from the rooftops. Firstly, what I'll say is we've definitely got an interesting spectrum of partners that we're working with. We're working with some that are definitely in that early stage disruption, trust list and self managed model. One I can name, because we've got a public case study is Instagram. I know they're part of the Prop Tech Association. And you work out to AJ? Yeah, we'll give a shout out to AJ. So they've worked with us. 

31:29

James Foster

Again, interesting, in that model, as well as in that self managed space, it's not just about processing tenant payments. As I said, what we're able to help facilitate is moving that money around to the landlord, to the service provider. They're really leveraging the full stack of our capabilities of not just those rental payments, but also moving money around and meaning that Instorent doesn't have to operate its own trust account and it means that they can settle faster to landlords. We're working with a number of platforms like Instorent. On the other end of the spectrum, we're also working with some well established, very large players that have multiple brands in the rental payment space that are realising that they are being disrupted by some of those startups and are needing to offer a suite of capabilities and payments. Friction and increased settlement speed is important to them, not just in the rental space, but also in strata. 

32:32

James Foster

So it's not just residential, obviously, people. 

32:36

Kylie Davis

Oh, yes, strata fees. God, why I'm always getting into trouble for missing my Strata fees. Not because they intend to, it's just that oh, God. Now, to go in manually and set up a vpay payment for. 

32:48

James Foster

There you go. Exactly. 

32:49

Kylie Davis

You've just put that bigger subscription people. I don't care. 

32:54

James Foster

Exactly. We're working with some relatively large players in that space and it's a different challenge there as well because again, they've got more established software platforms, they've got bigger teams, they've got lots more priorities and so how they fit that in and where they see that importance coming into play is more challenging. We do have a fairly broad spectrum. To be fair as well, what I'd also say is that we've also got a number of quite small real estate providers that are doing effectively their own property management and either having their own platforms or using some of our standalone capabilities because their rent roles aren't necessarily huge and they can take advantage of that as a bit of a stepping stone. We do have quite a broad range of partners. Clearly, I would love to get more and we're seeing that trend drive more and more. 

33:50

James Foster

Particularly to your point, I think COVID was a real shot in the arm around digitising a lot of those old processes and making people recognise there was an opportunity to change. Eventually it's now getting to, I think, payments, because as I said, people have taken payments for granted and there's a number of other things that are changing in the industry that people are recognising that is going to be significant and they need to do something. 

34:17

Kylie Davis

James, what is that? Have we talked about that yet? 

34:23

James Foster

Or is that we haven't? That's again, another great thing to talk about. So pay two. Again, I've got to be mindful that a lot of your listeners won't necessarily be in the payment space. So pay two for starters. P-A-Y-C-O. Not the number two. P-A-Y-T-O. Okay, so we have to wind the clock back . So, as I mentioned, we've got this direct entry system, direct debit. It's been around for a long time that affected both pull payments, direct debit as well as push payments. It was slow to send money to people. Along came the NPP, the New Payments platform, and that's what has powered capabilities like Osco. People probably may be more familiar with Osco, but it also introduced this thing called PayID. Again, people have heard of Pay. ID. That was all created by the New Payments Platform, which is originally a separate entity called the NPPA. 

35:26

James Foster

New payments platform. Australia or association, never remember what the A is, which was a conglomeration of a bunch of the banks as well as the big retailers. They all got together and said, hey, Australia's, payments infrastructure sucks. We're going to build some cool real time payment infrastructure. They worked and a bunch of years ago they released the NPP, which is what has powered realtime push payments. We're now as Australian consumers, a lot more used to being able to send someone money and arriving in real time. Okay, there's a couple of exceptions around that, but that's what the NPP is. As a side note, there used to be the NPP Fpos as a separate organisation and Bpay, and they all combined together in the last 1224 months into a new organisation called Australian Payments Plus. AP plus. Basically it's an organisation that's driving, effectively, innovation in domestic Australian payments. 

36:28

James Foster

Both Bpay Fpos and Nppay, so that's a bit of a crime. Right? They created this real time push payments infrastructure, but it didn't support and this is what we got frustrations from our customers about, is, hey, I can now send someone payments in real time. Why? Ezypay. Do I still have to wait three days for these direct debits? Why isn't it real time? We have to explain that the NPP infrastructure didn't have a capability for real time sorry. For pool payments for a direct debit, okay. Until technically, July 1 last year, right? That is when pay two was launched. This is where I'm going to fangirl about pay two. What I will say is that what we now have is actually so we've leapfrog, we've gone from the 1980s to the most advanced subscription payment infrastructure in the world, full stop in the world, and I'll try and convince you, Kyona, you're looking at me in your eyes. 

37:35

James Foster

Let me try and convince you why it's the best in the world, because it does a bunch of things, okay? At the heart of it is a payment agreement. I'm meant to call it an agreement. I get in trouble by AP Plus when I call it a mandate. Under the covers, it's called a mandate. For those that want to know some insider baseball, the Pay two used to be called the Mandate Payment Service, which was a bit boring. That's why they decided to brand it as Pay Two. A mandate or an agreement is a digital version of those old school pieces of paper, okay? They are housed in a central database and they are made available inside everyone's Internet banking app. No matter who you bank with, and I'll come to that in a second. What you will have so, for example, when we set up a new agreement with you, it will pop up in your Internet banking app. 

38:34

James Foster

It won't because, again, what we're used to with old school direct debit authorities is just this vague notion of I agree to pay this person an amount of money for the rest of time. These digital agreements are far more specific, so we can control them. We're now saying, and not just that, but we involve everyone in the relationship. I can say Ezypay, in partnership with Instorent on behalf of this landlord is going to be taking this much of money from you and we can specify amounts and frequency. We can say we're taking $500 a week every week for 24 months, right? Or we can even do variable. We can say we're taking amounts between x dollars and Y dollars and we can say a maximum times per month. Or there's a whole bunch of different scenarios. We can even say things like a total amount payable until that's paid off. 

39:28

James Foster

There's a whole bunch of flexibility that's built into this concept of an agreement, okay? What that gives you as well is that agreement pops up in your internet banking app. You have to authorise that. You have to say, I'm okay with that. You have to approve it. Once that exists, so there's this agreement that sits, is that we can then pull that money from your account in real time. It comes time to take that payment, we can initiate it's called a payment initiation. We can initiate that payment and that payment occurs or is attempted, I should say, in real time, and is funded in real time. What's great about that? Forget about getting paid in real time. It's the importance. Coming back to what I said before about not knowing when a payment fails, a couple of things happen. We can now control the exact time and date. 

40:23

James Foster

It's a 24 x seven payment system. I can now take your rent out of your account at 10:00 A.m. On a Saturday because you've told me that's your preferred time. Or our systems have decided that's the best time to take your money out. We can now control the exact timing and day of the week that money comes out. If it fails, we know about it in real time. We know instantly that it's failed. We can attempt it an hour later, we can attempt it the next morning. We can control that. It basically turns the bank account infrastructure into what we have with credit cards, right? 

40:59

Kylie Davis

Right. 

41:00

James Foster

I'll come back to that in a second. So it's real time. We can take these payments in real time. We get funded in real time. Now, what I would also say the other benefit of it is those mandates. You've got control of that as the customer. Not only can you remove authority, so you've got that comfort that says I might be in dispute or I'm no longer at that property anymore, I'm not paying that. You can go in and disable that. It gives you comfort, but it also means you can change the account that's connected to. So there's a concept of a mandate. If you're changing bank accounts, you can just connect that mandate to a different bank account. You can even move banks. You've moved from CBA to Westpac. That mandate is now portable. No longer is this nightmare of when we change bank accounts and having to figure out all of our payments and reaching out to everyone and updating our details and writing a new piece of paper. 

41:57

James Foster

As a consumer, you can just move that mandate and we just bill against the mandate. The mandate knows where the account is. Happy days. So it's better for everyone. 

42:06

Kylie Davis

Awesome. 

42:09

James Foster

Why I say it's, the most advanced capability in the world is a number of other countries have built this real time capability, but what they haven't built is this mandate capability, right? A lot of other real time payment platforms are what we call request to pay. So they're sort of bill payments there. Hey, Kylie, you owe me money. Please pay me this amount. You authorise it and I take it again. This concept of these agreements means that we can do proper subscription, recurring payments and we can manage that within that scope. What it's also been and what we've got to actually appreciate here is the Reserve Bank of Australia stepped in and made this mandatory for all banks in Australia. Now, what I would say, and this is the commentary at the moment, I said before went live, 1 July last year, not all banks were ready. 

42:59

James Foster

In fact, at the time of our conversation, right now, only one of the major four banks are live and that's Commonwealth Bank. So they went early. A couple of other smaller banks have gone live and the Reserve Bank got a bit grumpy with the other banks and said you missed your deadline and there's a new deadline of April May this year and everyone has publicly said that they're on track and they're going to be live. By the middle of this year, at least, pretty much the majority of banks will be live with this capability. That means, as I said, for consumers it's super easy because these mandates will just pop up in their Internet banking app, right? What's even better about that and that sorry, that's the last thing I forgot. You can tell, as I said, I warned you I was fangirling about this. 

43:53

James Foster

Pay is also integrated with this, right? And this is what also frustrates me. A lot of people don't get what Pay ID is. PayID is a global address book which instead of remembering your BSB and account number, you can set up your own Pay ID, which is typically your email address or your phone number. When you want to get paid by someone, right, you can say, here's my Pay ID, you don't have to give them a BSB and account number. You say? Here's my pay ID. What's great about that number one is people don't have to remember a BSB and account number. What's also great is there's some inherent inbuilt security with that fights against scams. Because when you pay someone using a Pay ID, it resolves that and it shows you the account name, right? Someone can't be dodgy and pretend that there's someone on their night and say, hey, I'm from Qantas, please pay me $1,000 you owe me. 

44:47

James Foster

Here's my BSB and account number with a pay ID. If they said, hey, I'm Qantas and here's my Pay ID, and you were trying to pay with them and it appeared that the account name was James Foster, you'd go, oh, something's dodgy going on. Pay ID is fantastic in terms of push payments and fighting fraud, but it's also integrated with Pay, too. Again, just from the customer experience perspective, it means if I'm signing up for something, I don't have to remember my BSB and account number. And not only that, I don't. Even if I'm paying by credit card, because people like cards because they've got them on them, you still have to know what your 16 digit credit card number is. You don't need to know that anymore. You just remember your email address or your phone number, you sign up with those details, you'll then get this push notification in your Internet banking app, you authorise it and you're off to the races. 

45:33

James Foster

It's a fantastic customer experience and it's fantastic for businesses. In the context of property management, fantastic for landlords because it's guaranteeing they're getting paid faster. It just improves that whole process. It is going to be a massive game changer. And that's why, for us, incredibly important. We were one of the first payment initiators or subscription payment providers to go live on day one. We're live with Pay two now and again. We're working with a number of our partners in that pop tech space to make sure that they're taking advantage of that and really, to close it off, the analogy that I often use, right, is sending a parcel direct debit is like sending a package with Australia post it's slow, it'll get there, but it's pretty cheap. It's relatively cheap. There's no tracking. Sometimes it doesn't get there. But you know what it is? What it is paying by credit card is like the analogy of sending it by courier. 

46:40

James Foster

It is fast, you've got tracking, but Jesus, a bit expensive. If you really need it to be there, definitely on time, you're going to use a courier. There might be a bunch of features there like refrigerated, transport, and I'm not sending something that needs refrigeration. There's some features there you might not need paid to is the express post of that analogy. It's got tracking it's faster, it does all of those things. It's a massive improvement parcel, post it'll get there next day and it's not as expensive as sending it via courier. That's the analogy that I like to use. 

47:15

Kylie Davis

Okay, awesome. 

47:17

Speaker 4

This episode is sponsored by Ezypay. Ezypay makes collecting Prop tech payments easy. As one of Australia's leading subscription payment providers, Ezypay is helping real estate and prop Tech businesses to improve rental collection rates, transform arrears management, and increase cash flow. Built for integration with a focus on partnerships, easypace platform works seamlessly with your existing proctech software, giving you access to industry leading features that enable complex billing and settlement to support trustless business models. Discover the power of payment automation, and leverage one of the first platforms to enable the pay to payment solution@Ezypay.com, proptech. 

48:01

Kylie Davis

So, what kind of partners, what kind of businesses could and should be using here?