Payments NZ has released its consultation paper on next generation payments, following its Payments Modernisation Plan (PMP) published in 2020. The PMP sets out the next steps towards modernising New Zealand’s payments ecosystem, with a view to what this ecosystem could look like by 2030 for consumer representatives, businesses, industry bodies, and government agencies. Following expert industry insights, Payments NZ is now seeking public feedback on New Zealand’s next generation digital payments infrastructure.

The consultation will remain open until March 2025.

Who should read this? Why?

The digital payments industry, government, regulators, and wider stakeholders are encouraged to consider the consultation’s proposals, and to provide feedback on future opportunities, foundational design, and the roadmap towards New Zealand’s future digital payments ecosystem.

What does it cover?

The consultation paper focuses on the progress Payments NZ has made towards planning New Zealand’s next generation digital payments ecosystem, with the purpose of strengthening payments security, improving customer experience, increasing consumer certainty, supporting higher economic growth, and encouraging the adoption of emerging technologies. The consultation addresses these points through three chapters:

Chapter 1 considers the broad benefits of payments modernisation, where economic demand, global trends in technology and regulation, and the evolving needs and expectations of consumers and businesses make modernisation a critical next step for New Zealand’s digital payments landscape. The consultation paper considers global initiatives, the limitations of New Zealand’s current system, the risks of inaction, an overview of the proposed governance, management and regulatory oversight, and the steps already being taken towards payments modernisation.

Chapter 2 sets out the next generation digital payments (transfer of money between two bank accounts) ecosystem design, where the design reflects the prioritisation of payments security, futureproofing, leveraging payments capabilities, and the delivery of real-time digital interactions (the functional capabilities that facilitate an information exchange, but not the processing of payments). The consultation prioritises an account-to-account real-time digital payments model via a centralised platform as the preferred model, and will continue to give this consideration in respect of consultation feedback.

Chapter 3 presents the roadmap to establishing New Zealand’s next generation payments ecosystem, with a short-term focus on increasing payments safety and efficiency, and a long-term focus on real-time digital payments. Payments security will remain the roadmap’s priority in respect of stakeholder demand and the smooth integration of future technologies, while current technologies such as application programming interface (API) capabilities, seven-day payments, and low settlement risk will be leveraged. The consultation paper states that these next steps will transform New Zealand’s payments landscape from electronic to digital, drive innovation and competition, and deliver business value to industry.

The consultation sets out 33 questions, asking participants to state the extent to which they agree or disagree with the question, and provides an opportunity for participants to provide direct feedback to each of the consultation’s questions.

Our view

The consultation plays an important part in building on the progress Payments NZ has made towards the modernisation of New Zealand’s payments ecosystem. It is important that New Zealand’s payments infrastructure keeps up with evolving global technologies and initiatives, where our current payments system is unable to facilitate the real-time interactions that the future of digital payments requires. We see this as an opportunity to draw on global observations and to leverage the strategies which have worked offshore, and to work towards the further development of technologies such as open banking and digital identity services. We encourage the digital payments industry, government, regulators, and wider stakeholders to consider the consultation paper and complete the consultation.

What next?

If you have any questions in relation to the consultation or digital payments generally, please contact one of our experts.

This article was co-authored by Andrew Walker, a Law Clerk, in our Financial Services team.