From tap-and-go purchases at the local café to the billions flowing between banks every day, Australia’s payments system relies on a crucial but often overlooked process: net settlement. In 2025, as digital transactions surge and regulators modernise the payments landscape, understanding net settlement is more important than ever for businesses, finance professionals, and everyday Australians.

What Is Net Settlement and Why Does It Matter?

At its core, net settlement is the process by which financial institutions calculate the total value owed between each other after offsetting all incoming and outgoing payments over a set period. Instead of settling every transaction individually—an approach that would clog the system—banks and payment providers tally up the net result, then transfer just the difference.

Efficiency: Reduces the number of transactions that need to be settled, saving time and costs.
Liquidity management: Banks only need to fund the net amounts owed, not the full value of gross transactions.
Risk reduction: By netting transactions, the system lowers settlement risk (the danger that one party fails to deliver on its end).

For instance, if Bank A owes Bank B $10 million and Bank B owes Bank A $7 million on the same day, net settlement means only $3 million needs to change hands. This mechanism underpins everything from EFTPOS and BPAY to business-to-business payments.

How Net Settlement Works in Australia’s 2025 Payments Landscape

The Reserve Bank of Australia (RBA) oversees the Reserve Bank Information and Transfer System (RITS), which is the backbone for high-value payments and net settlement in the country. Most retail payments—including credit cards, direct debits, and bulk electronic transfers—are settled on a net basis through RITS.

Key components in 2025:

Batch processing: Payment instructions are collected and netted at scheduled intervals (e.g., end of day).
Clearing houses: Organisations like the Australian Payments Network (AusPayNet) and New Payments Platform (NPP) Australia facilitate clearing and netting before settlement.
Real-time payments: The NPP enables near-instant settlement of many retail transactions, but for some bulk and legacy payments, net settlement remains essential.

Recent updates in 2025 include the expansion of net settlement windows and enhanced interoperability between traditional banks, digital banks, and fintechs, reflecting the RBA’s commitment to a more competitive, resilient payments ecosystem.

2025 Policy Changes and Their Impact on Businesses

The regulatory landscape for net settlement has evolved rapidly. In February 2025, the RBA implemented new prudential standards requiring payment providers to bolster liquidity buffers for net settlement positions. The goal: further reduce systemic risk and ensure smooth operation even during financial stress or cyber incidents.

For small businesses: Faster settlement cycles mean quicker access to funds from sales, but also require closer cash flow management.
For corporates: Enhanced reporting and risk monitoring are now mandatory for large value payments, influencing treasury operations.
For fintechs: New entrants must integrate with existing clearing and settlement infrastructure, but policy tweaks have made onboarding easier and more transparent.

Practical example: A Sydney-based retailer using a cloud POS system may now receive same-day settlement for card payments, thanks to improved netting processes and regulatory reforms—helping smooth working capital in a high-inflation environment.

Looking Ahead: The Future of Net Settlement in Australia

As digital wallets, cryptocurrency payments, and embedded finance platforms proliferate, net settlement is adapting. The RBA is trialling central bank digital currency (CBDC) pilots with net settlement features, aiming to future-proof Australia’s financial plumbing.

In the next few years, expect further automation, increased transparency, and tighter integration between domestic and cross-border settlement systems. For businesses and individuals, this means faster, safer, and more predictable payment experiences—backed by the invisible but indispensable engine of net settlement.