Australian financial institutions are considering a radical initiative that could see BPAY codes trump bank account numbers.

Codenamed MAMBO (Me and My Bank Online), the top-secret BPAY proposal could deliver the bank account portability that Australian Treasurer Wayne Swan so desperately wants Australian consumers to enjoy.

Instead of a bank account number and BSB, individuals would register for their own BPAY code which could be used to facilitate payments. Consumers could then port their number from bank to bank without the need to re-establish direct debits or credits, and use it to enable online payments.

Online Banking Review has confirmed with BPAY general manager Andrew Arnott that the MAMBO project exists.

Arnott says the proposal would facilitate a “Universal address for customers at their Internet bank.”

  “From that flows a lot of consumer possibilities.” 

The Reserve Bank of Australia has been pushing the banking industry to provide more payments alternatives for consumers shopping online. It is also overseeing industry initiatives to make switching bank accounts easier, following pressure from the Federal Government. 

Some commentators are already calling the switching package a failure arguing it doesn’t go far enough to make the major banks more competitive.

Melbourne Business School economics professor Joshua Gans has been calling on the Rudd Government to legislate the transfer of ownership of account numbers and loan balances from banks to customers. 

The new scheme would help the industry defend itself against claims that switching is too hard, and at the same time demonstrate it is capable of innovating to offer online payments methods beyond credit cards. 

Arnott denies portability is a major driver behind the initiative but says “If portability can be addressed in some small way with what we’re doing then that would be great.” 

BPAY has shown in the past it is capable of bringing the major players together to deliver system innovation, something the Australian Payments Clearing Association has struggled to do despite pressure from the Reserve Bank. 

Getting the major players to agree on the eventual shape of the new service could prove challenging, and then there’s the need to build a viable business case, which means it’s highly likely the service will come at a cost to consumers. 

Arnott confirmed with Online Banking Review the group is in discussions with industry participants about enhancing the relevance of BPAY for banks, but said it was too early to speculate as to the eventual consumer applications it might facilitate. 

He also moved to hose down any speculation that the proposal involves an “identity number” telling Online Banking Review it would in fact be exactly the opposite and would not be sensitive from a privacy perspective.