How we’re working to make life easier for Kiwis

By Steve Wiggins, Chief Executive, Payments NZ

Technology is evolving at a rapid pace, and we’re working with industry to ensure Kiwis ultimately benefit by being able to pay who they want, when they want and how they want.

At Payments NZ, we’re working with the industry to understand and explore innovation and capabilities that will future-proof and improve the payments system. New Zealand already has one of the world’s most efficient and interoperable payments systems. We want to make it even better.

That’s why I’m proud to announce the launch of an industry API pilot, which tests the viability of two APIs – the technology tools which allow easier digital transactions. APIs (application programming interfaces) are the ultimate digital middleware. They enable disparate systems to connect, interface and action requests with each other. APIs are not new; they are used prolifically in tech systems and are behind many of the seamless user experiences enjoyed in apps and online.

New Zealand is one of just a few countries where the exploration of payment API innovations is being led by the market. The APIs we’ve chosen to pilot are fundamental building blocks to answering consumer and business needs around the simplification of digital transactions and service propositions.

The pilot will test two API standards: Account Information and Payment Initiation. The Account Information API will enable development partners to make pre-payment checks, such as confirming account details are correct and that there are sufficient funds to make a payment. 

The Payment Initiation API will enable third-party development partners to set up and make an electronic credit payment by connecting directly and safely with bank development partners.

Because APIs enable divergent systems to interact with each other, the potential for innovation is immense. Over the past 18 months, as this work has taken shape, my team and I have met with a wide range of industry and ecosystem stakeholders, from fintech startups to large tech organisations and government departments.

All are excited by the prospect of standardising common payment-related APIs. This is because they can both enable new, cutting-edge digital innovations to come to market, and ease existing consumer and business user experiences and pain points.

Under the guidance from a larger industry advisory group, made up of 17 of our Participant and Member organisations, the industry working group has been working on the development of the shared API framework. For the last four months the working group has been working tirelessly to develop the API standards and pilot. The pilot is a pragmatic step in the development of the framework, and will add practical insight into how to best support the ongoing development of standardised payment-related APIs in New Zealand.

Six development partners, a subset of the working group, are conducting the pilot and will feed valuable insights into the refinement of the API standards and design of the framework. The pilot development partners are ASB, BNZ, Datacom, Paymark, Trade Me and Westpac.

The pilot is taking a minimum viable product (MVP) approach and activity will be conducted over five phases. The six development partners will be responsible for all liability, security and privacy requirements in accordance with relevant legislation and agreed terms and conditions.

The API standards we are testing have been adapted and modified from the UK’s open banking API standards for our local market conditions and our pilot MVP approach.

Payments NZ has been tracking the rise of the open data and API landscape since 2015 as part of our Payments Direction programme, and developed a work plan for investigating the shared API framework opportunity in early 2017.

The opportunity for a shared API framework sits alongside five other strategic priorities currently being investigated by industry: 365-day service availability, proxy identifiers, speeding up payments, request to pay, and the ISO 20022 payments messaging format.

Collectively these six opportunities go a long way to enabling a range of capabilities that would build on an already efficient and interoperable system that will lay the foundations for an exceptionally innovative payments marketplace.

Internationally, there is focus on the opening up of customer data held by banks – commonly referred to as open banking. The sharing of customer data using APIs is being considered and implemented, notably in countries like the UK and Australia. Other countries, such as the US, are taking a similar approach to New Zealand - with industry leading the charge in setting up a framework to standardise and manage payment-related APIs.

The drivers for our work reflect our high level of interoperability and track record of industry collaboration. Specifically, the drivers are to enhance simplification and consistency of delivery; increase the speed to market for new tools and offerings; enhance services; and provide easier partnerships.

A shared API framework, that is ‘right-sized’ for the New Zealand market, will significantly increase efficiencies and enable new innovations to get to market faster. It is vitally important the safety, security and integrity of the system is maintained as the industry advances this work.

Alongside the pilot, and working with industry and interested parties, we will continue to design the operational and management components of the shared API framework within which the pilot and subsequent APIs could operate.

The ultimate aim is to have a shared API framework and agreed specifications for a range of common APIs that will contribute to the aspiration of a progressive payments ecosystem. The pilot is a huge step towards that and an easier life for New Zealanders.

If your company is interested in the work we are doing and want to contribute, please contact us. If you want to keep up to date with developments and industry news, subscribe to our Top Reads newsletter.

See the About Us section for more information about our Payments Direction programme.