Payments NZ Settlement Before Interchange project
22 Apr 2012
Payments NZ Limited says the new, faster system for the interchange and settlement of domestic payments between banks has put New Zealand at the cutting edge of international best practice.
The new payments settlement system now enables banks to exchange payment information and settle their inter-bank obligations through the course of a business day. Previously banks would exchange financial payment information each business day, and then complete inter-bank settlement the next morning.
Payments NZ led the project on behalf of the banking industry. The project, which took a number of years to coordinate, required the phased implementation of the system through eight banks. The Reserve Bank also implemented system changes to accommodate the new system.
With Payments NZ’s oversight, the project was rolled out to all eight banks on time and without any disruptions.
CEO Steve Nichols says the project has been a huge success and the new system will be a considerable improvement.
“The full implementation of the new interchange and settlement system means we have moved to a new platform that allows all participant banks within New Zealand to connect and exchange financial information. The project was completed without any problems which is a major achievement, and one that Payments NZ is very proud of.
"The previous settlement system had been in place for over 20 years and was in need of renovation. There was only one daily settlement between banks; under the new system there will initially be five with the flexibility to increase this number in the future."
Although the new settlement system is a substantial improvement, customers are unlikely to see any difference.
"The new settlement system does not change the way customer accounts are managed by participant banks. This improvement is a behind-the-scenes technology upgrade which is designed to take systemic risk out of the payment system. What the upgrade does offer banks is a more efficient payments environment which has the potential to provide more streamlined services for their customers into the future."
Notes for reporters
- Payments NZ was established in October 2010. It is responsible for setting and overseeing the rules and standards that are central to the way payment instructions are exchanged and settled between financial institutions in New Zealand.
- There is a fact sheet available for SBI.