Our consultation paper, Consultation on payments for the next generation, provides a view on what a modern payments platform could look like in Aotearoa New Zealand.
The consultation paper suggests beginning with a small, centralised platform for core payments functions. Once that is in place, further capabilities that enhance safety and unlock new business value can be built in stages.
Formal consultation has commenced allowing the industry, government, regulators, and wider stakeholders to consider the future opportunities, foundational design and ecosystem roadmap and provide feedback.
The consultation phase is important to continue to shape and evolve the work we’ve done so far, identify priorities and preferences, including understanding the impacts on stakeholder internal systems and potential delivery timing before work can move forward to the next stage.
Although we are open to hearing all views and encourage challenge, discussion, debate and sharing of new and unexplored possibilities, we have purposely stated a position in the consultation paper in order to generate feedback.
The consultation document contains a preface and three chapters:
Chapter 1 provides context by setting out the broad ecosystem benefits of payments modernisation, and the reasons why an investment in next gen capability is imperative for Aotearoa, including:
The drivers of payments modernisation around the world
- Payment systems are increasingly viewed as an item of critical enabling infrastructure.
- There is a greater awareness of the need to improve the safety and security of the payment experience, especially through coordinated industry action and using digital identity solutions to protect against fraud and scams.
- Linking payment systems across jurisdictions can play an important role in supporting economic growth, trade, and inclusion.
- Payment system modernisation needs to have an ecosystem perspective.
- A decade of international learnings have led to an evolution of best practice for infrastructure design.
A perspective on the current payments landscape within Aotearoa
- The closure of the Paper Clearing System.
- The launch and operation of the API Centre to provide industry leadership on open banking.
- Extending the processing of electronic payments through our Settlement Before Interchange system to 365 days a year.
- Transitioning our High Value Clearing System to the ISO 20022 messaging standard.
- RBNZ’s replacement of the Exchange Settlement Account System and NZClear, and its investigations into a CBDC.
The risks of inaction and limitations of the current systems.
- Highlighting the current limitations of the batch system and BACHO messaging; the growing gap in customer and business expectations and what the batch system can deliver.
The high-level considerations of regulatory oversight and governance
- The governance and management which is required to oversee the next gen ecosystem. Including addressing the governance and operational considerations of a next gen ecosystem.
Chapter 2 presents a conceptual foundational modular ecosystem design prioritising the introduction of real-time digital interactions first, as this lays the foundation for the eventual safe introduction of real-time digital payments. Accordingly, the conceptual design reflects the following:
- Prioritising safer payments capabilities from the beginning, for all interactions.
- Creating a resilient and scalable national infrastructure that can underpin the future digital economy of Aotearoa.
- Establishing an enduring, equitable and futureproofed payments ecosystem that is fit for future generations.
- Being well connected with, and leveraging, other payment capabilities including open banking and digital identity services.
- Delivery of real-time digital interactions that provide enabling benefits to market participants and support end users, and at the appropriate time, delivering real-time digital payments in a safe and low risk manner.
- A modular approach which supports the delivery of modern real-time digital interactions and the eventual introduction of real-time digital payments capability that is flexible, adaptable, safe and cost effective in a way that maximises the opportunity for participation and utilisation.
Chapter 3 introduces a capability sequencing roadmap which harnesses this modular capability, commencing with enhancing the safety and efficiency of payments today, followed by introducing digital interactions and real-time (near-instantaneous) digital payments in the future.
The roadmap sequence reflects stakeholder demand, prioritising safer payments and real-time digital interaction capabilities that unlocks new business value for participants and their customers. The introduction of real-time payments instruments is planned for later stages, drawing on previously introduced capabilities to ensure a smooth transition and integration. This approach ensures that a next gen system can deliver immediate value and ensure the most critical needs are addressed first, while minimising risk and complexity.
Capabilities are introduced in a logical sequence where each module delivers value independently while also preparing for subsequent deployments. Importantly, as the prioritised capabilities are designed to be extendable, the recommended next gen system provides an ecosystem into which future enhancements and adaptations can be added based on lessons learned, evolving demands and new technical developments. The approach also leverages the industry’s existing capabilities and strengths, such as API capabilities, seven-day payments and low settlement risk. Finally, this approach aims to transform the payments landscape from electronic to digital infrastructure, drive digital innovation and competition for consumers, and deliver significant business value to all industry participants while balancing system integrity and resilience, industry investment and resource capacity.
The key features of the next gen ecosystem are a set of functional modules designed to deliver payment related services to all participants facilitating digital interactions, including:
- A toolkit of capabilities to help fight fraud and financial crime, including AI based fraud detection, digital identity services and other components adding to the surety of payments for customers.
- Real-time information exchange messaging supporting end user knowledge about payments, both as they occur today, and as they’re intended to happen tomorrow.
- A scheme framework as a robust governance construct for the evolution of products and services by participants.
- Rich orchestration capabilities to support complex multi-party digital interactions, and complex multi-service products.
- Real-time value exchange and the subsequent ability to engage in fast cross-border commerce in the future.
You can view the full consultation paper here.
Consultation questions
Throughout the consultation paper there are a number of questions posed to understand the perspectives of stakeholders in the payments chain of Aotearoa.
You can view the consultation questions and read more about the consultation process here.