He pūwaha pūtea, he pūwaha tangata
A gateway for resource, a gateway for people
2024 is shaping up as a significant year for Payments NZ, with a wide range of work taking place across the API Centre, Payments Direction, clearing systems, events, regulatory and industry engagement, and more. Read our full update on the first six months of the year below.
API Centre
The API Centre marked a key milestone at the end of May, with Aotearoa New Zealand’s four largest banks confirming support of its Payment Initiation v2.1 API standard. This was the first of two deadlines that will occur in 2024 under the minimum open banking implementation plan announced last year.
The Payment Initiation standard allows consumers to set up and make domestic payments by connecting directly through a registered third-party app or service to a registered API Provider, such as a bank, without sharing personal banking credentials.
With ANZ, ASB, BNZ and Westpac now in partnerships with at least one registered third party using the Payment Initiation standard, we can look forward to more innovative and secure payment methods continuing to become available to New Zealanders. The API Centre will now work with the four banks towards the next milestone date for implementation of the Account Information v2.1 standard, due on 30 November 2024.
Forward standards development work is also continuing in collaboration with industry. The API Centre released version 3.0 of the API Standards in late January, adding a new event notification functionality as well as a major security profile update.
We currently have an application before the Commerce Commission Te Komihana Tauhokohoko which would authorise the API Centre to work with API Providers and third parties to design a more streamlined partnering framework. You can read our full explainer online here, and our application is available to read on the Commerce Commission website.
The API Centre has also been busy responding to an ever-changing regulatory environment. The Commerce Commission has set very clear expectations of the API Centre this year, and the Customer and Product Data Bill – introduced to the House and soon to come before the select committee – will also have impacts on our work.
More broadly, the API Centre has continued to strengthen the ecosystem by working with the industry to develop API performance and monitoring requirements, which will enable a consistent operating model.
Payments Direction
Our Payments Direction team has continued its work exploring a next-generation payments ecosystem, including the development of an Industry Strategic Investment Case (ISIC) to set out the case for change, opportunities and benefits, and an initial foundational design.
Our focus this year has been to further refine the ecosystem design, capabilities and sequencing. This has included working with industry to identify priority functionality and work areas, so we can tackle the most important aspects first.
This refinement has been a complex task, and we’re on track to complete it in the coming months. Once it’s complete, we plan to move into a consultation phase with the industry to seek feedback on our design work to date, and to further refine the path forward for a next-generation system.
Alongside our work with industry on future capability, we’ve also undertaken a new instalment of our regular Consumer Survey with research partners Yabble, to understand how New Zealanders pay now and how they want to pay into the future. We’ll be releasing key insights from this research during July.
Clearing systems
We marked one full year of seven-day payments between bank accounts on 26 May. Initial analysis has shown that our SBI365 project has achieved key strategic benefits around enabling commerce, allowing prompt access to funds, and reducing pipeline risk.
Over the last twelve months, an average of $1 billion per weekend has been settled between participants, including $200 million per weekend in card payments settled to merchants who previously had to wait until the next business day. Overall Monday transaction volumes have decreased by 30%, reducing settlement risk for participants by creating consistent movement of value seven days a week.
The core payment systems team has also been continuing with the ISO 20022 messaging standard project this year, working with financial institutions and their representatives as they work through the implementation of this generational change in global payments infrastructure.
The team’s current focus is on readying participants to initiate messages using ISO 20022 for High-Value Clearing System (HVCS) transactions. The standard will apply to all HVCS transactions by November 2025, for domestic and cross-border payments, supporting data-rich and streamlined payments across our economy.
Tō Mātou Haerenga
We’ve continued to embed Payments NZ’s te ao Māori strategy, Tō Mātou Haerenga (Our Journey). Tō Mātou Haerenga reflects our commitment to upholding Te Tiriti o Waitangi and ensuring representation and rangatiratanga (self-determination) of Māori in the payments industry.
This year we are laying the foundation of the strategy in our organisation. One of the key goals for the current phase of this strategy is to build cultural competence in te ao Māori and foster bicultural understanding within our team. We are developing draft frameworks, policy papers and processes to ensure that Te Tiriti and mana-enhancing Māori policies are upheld in the work of our governance committees and working groups.
In line with the tikanga (guiding principles) of Tō Mātou Haerenga, this year we’ve begun an exploration of how a Māori data governance approach can support our work to deliver world-class payments for Aotearoa. This project focuses on understanding Māori data governance concepts, why they are important, and how they can be weaved into the work of Payments NZ.
This work is being undertaken with Nicholson Consulting based on the Māori Data Governance framework, which reflects best practice data governance in both public and private sectors, with benefits for Māori and non-Māori.
Our initial focus was a review of the API Centre’s Standards for account information and payments initiation. These standards relate to user data and consent agreements where Māori data governance and data sovereignty are highly relevant. We are now working to develop educational assets, including training workshops, video and webinars, to ensure that our stakeholders and colleagues in the payments industry can engage alongside us on this journey.
Regulatory radar
One of the key regulatory developments this year has been the long-awaited introduction of the Customer and Product Data Bill to Parliament. The bill is designed to create a ‘Consumer Data Right’ which will give consumers control over how their data is accessed and used by third parties. The banking sector is the first designated sector under the bill, with others such as utilities and health to follow. The draft Bill can be read in full here.
The Commerce Commission has been progressing its market study into personal banking services, with a draft report released in March. The Commission also released a proposal to designate the interbank payment network under the Commerce Act.
We put forward our views on the market study via two submissions, one focussed primarily on interbank switching, and the other discussing wider aspects of the market study as well as the proposal for designation.
We’re continuing to engage with the Reserve Bank of New Zealand Te Pūtea Matua (RBNZ) as it considers whether the High-Value Clearing System and Settlement Before Interchange systems, which we manage, should be designated under the Financial Market Infrastructures Act 2021.
We’re also preparing to engage with the RBNZ's work around digital cash, as well as responding to other ongoing RBNZ workstreams.
All of our past submissions from 2024 and previous years are available to read on our website.
Industry engagement and connections
The first half of 2024 has seen us bring people together through numerous industry events. To mark International Women’s Day (8 March) we held The Link at the Buddle Finlay office in Auckland. The theme of this year's International Women’s Day was #InspireInclusion, and we were thrilled to have Mary Haddock-Staniland join us to share her experiences and speak on the importance of diversity and advocacy.
April began with the year’s first instalment of The Forum for our Members and Participants. This session focused on innovation, and topics included social good, customer voice, and strategic payments.
Later that month we explored how digital identity and payments intersect across an online hui and an in-person workshop. Hosted alongside Digital Identity NZ, the events welcomed more than 70 experts from Aotearoa and abroad to look at interoperability between digital ID and innovation in banking, finance and payments.
In May, the API Centre held an Open Banking Showcase that was attended by more than 500 people across our in-person audience in Tāmaki Makaurau and online through Techweek24. This event spotlighted open banking services that use our Payment Initiation standard. Some are in market already and others on the cusp of delivery.
The Showcase included tech demonstrations from four fintechs – BlinkPay, Qippay, Volley and Worldline. The presenters were joined by representatives from ANZ, ASB, BNZ and Westpac for panels that examined the partnering journey and the future of open banking. Feedback on this event was very positive and will inform our plans around the next open banking implementation date at the end of November.
The Point 2024
We’re very much looking forward to the return of the payment industry’s flagship biennial conference, The Point, in November. The Point 2024 will be held over 19-20 November at Auckland’s Aotea Centre, and include a striking conference dinner, The Point After Hours, at the end of day one.
This year our theme is Navigating Beyond, a call for all of us to look to new horizons amid a period of complexities and challenges. We’ll be joined by international and local decision makers, influencers and experts from across the industry to discuss the key trends and topics that we should be keeping our eyes on.
Registrations are now open, with early bird pricing available for a limited time. Make sure you sign up to our mailing list and check out our conference website to hear the latest announcements of speakers and programme details.