December 2021 update

The cusp of a new year is always a great time to reflect on what has been and look forward to what’s ahead. Despite the ongoing impact of COVID-19, our work has continued. In no particular order, here are a selection of our highlights from 2021, and a quick glimpse into what 2022 has on the cards for us in terms of our work.

Keeping the industry connected

Unfortunately COVID-19 threw more challenges at us this year, which means connecting with the industry wasn’t always able to happen the way we would have liked. However, we were able to carry on and adapt, shifting meetings and events online when needed.

In 2021, we were pleased to have:

• Facilitated 25 hours of Payments Direction working groups and other engagement activities, involving more than 30 people from across the industry to continue working on our strategic payments roadmap for the future.
• Held operational forums, working groups, and clearing system Management Committees and together spent thousands of hours working on core clearing system projects.
• Had a fantastic turn-out for our second-ever The Hub Series, which kicked off in May with an in-person launch event where we also celebrated Payments NZ’s 10-Year anniversary. That was followed by three online sessions in June, July and September. We had 660 people register to attend the series, which was themed ‘Bringing the world of payments to you’.
• Discussed strategic drivers, trends and issues with senior Participant and Member representatives over three Strategic Forums throughout the year.
• Continued to encourage involvement and grow our direct stakeholder network. We currently have 13 direct settlement Participants, 3 Infrastructure members, 30 Industry Members, 8 API Centre Providers, 13 API Centre Third Parties and 114 Community Contributors.
• Reached 1600 email subscribers through our Top Reads weekly newsletter, company updates and API Centre updates.

Continuing to govern safe, efficient, open, innovative, and interoperable systems

The world and Aotearoa New Zealand has seen a lot of changes and faced some new challenges this year. Our vision through all of this has remained the same. We strive for Kiwis to be able to pay who they want, when they want and how they want. This means making sure our core payment systems, the engine room of the economy, remains efficient and secure.

We’ve made headway with some important clearing system initiatives this year. This includes:

• Managing the industry project to design messaging specifications and message guidelines for Participants of our High Value Clearing System (HVCS) to assist with their move in late 2022 to the ISO20022 messaging format.
• Our Consumer Electronic Clearing System (CECS) Management Committee developed standards for the CECS rule set to send chip data from domestic ATM acquirers to domestic card issuers. This contributed towards reducing card fraud and helped instil confidence in the safety of New Zealand’s payments system.
• Making good progress with work around our rules strategy review. A rules strategy review discussion document has been considered by an industry working group and we’re now preparing a draft paper for the working group which will:

• assess how the rules comply with the Principles for Financial Market Infrastructures (PFMIs)
• outline a high level scope and structure for the rules
• set out a draft payments value chain which identifies any gaps and highlights where Payments NZ’s role and purpose adds the most value.

• Decommissioning our Paper Clearing System (PCS), which governed cheques, after the last Participants ceased issuing and accepting cheques and resigned from the system on 31 August 2021.
• Working towards extending the interchange of payments between Participants from five business days to seven days a week.

Government and regulatory consultations

Even though the end of the year is now upon us, our work hasn’t slowed down. There’s been a lot of activity in terms of government and regulatory consultations, with papers out for consultation that are of interest to the payments industry. Below are the ones we have responded to in the past month. You can read our submissions on our website.

• Department of Internal Affairs: Towards a Digital Strategy for Aotearoa
• Reserve Bank of New Zealand: Future of Money – Stewardship
• Reserve Bank of New Zealand: Future of Money – Central Bank Digital Currency
• Reserve Bank of New Zealand: Enforcement principles and criteria
• Economic Development, Science & Innovation Committee: Digital Identity Services Trust Framework Bill.

Working with the industry to enable open banking

Our API Centre team has been doing more work around enabling the industry to deliver innovative open banking services that supports the financial wellbeing of Kiwis. There has been a lot of developments at the centre this year as we push ahead with initiatives that will continue to grow and strengthen the API-enabled open banking ecosystem.

Some of the centre’s highlights for 2021 include:

• Continuing to push through a pipeline of standards development providing iterations and improvements. This includes v3.0 scoping and working on release candidates for v2.2 and v2.3 of our standards for Account Information and Payment Initiation.
• Wrapped up the first phase of our partnering project, which identified areas to enable a more streamlined and transparent partnering framework. We also started scoping options for phase two activity.
• Reached a significant new growth milestone with 114 Community Contributors currently part of the API Centre. In addition, we have 21 API Standards Users made up of 8 API Providers and 13 Third Party organisations.
• Releasing v2.1 standards into the centre’s sandbox, powered by Middleware NZ, and also updated our Customer Experience Guidelines to incorporate v2.1.

We anticipate the new year will bring new challenges and opportunities in terms of the work we do. Key to our 2022 programme will be building on and further developing the good work we’ve done this year across our workstreams. In particular, we’ll be focusing on getting through our pipeline of standards development work and further progressing phase two of our partnering project.

Modernising our payment systems

Our Payments Direction team have had a continued focus on payments modernisation activities through our Payments Modernisation Plan (PMP document) this year. The PMP, released last year, sets out our view of the payments ecosystem in 2030 and outlines the core building block capabilities that will be needed to deliver that future.

A cornerstone of the PMP is real-time payments capability, and this is the area we have been focusing our efforts this year to understand what these capabilities could look like for our local market and conditions, and what role it could play as part of our modernisation plan.

To that end, we’ve run a market information gathering exercise to gather industry views from those with experience delivering real-time payments. As part of this exercise, we asked organisations with recent, relevant experience in real-time capabilities a range of questions, including on:

• Solution characteristics, such as clearing and settlement, liquidity and risk management, overlay services.
• Design and delivery.
• User experience.
• Business models.
• Strategic considerations such as scalability and future proofing.

We received high-quality responses from nine organisations with the type of experience we were seeking. Their responses reinforced our previous work and research, while also highlighting that the market approach has matured to become more adaptable and responsive to change. The responses also reaffirmed the importance of real-time as a core capability of a modern payments ecosystem.

Although the payments modernisation activities have taken up much of the team’s time, we also released a full environmental scan report this year, which confirmed the themes from our last full report in 2019 remain accurate but have begun to converge, with notable shifts on emphasis.

Thank you for your support

We’d like to thank all our industry stakeholders for supporting Payments NZ this year through your time, expertise and active participation in our work and events.

We’d especially like to note the many representatives from our Participant, Member and API Centre Standards User organisations who have generously shared their expertise and made contributions through our working groups, projects and initiatives, and governance committees throughout the year. A big thank you to all of you.

2022 is set to be another busy and complex year for the payments industry with ongoing regulatory work on the horizon as well as all the activities we’ll be undertaking as an industry. While we can’t be certain of how COVID-19 is going to play out, we do know from the last two years that the industry can and do adapt well to changes and will continue to make good progress into the future. We look forward to working with and seeing everyone again in the new year.