The Ministry of Business, Innovtion and Employment (MBIE) is seeking written submissions on whether New Zealand’s regulation of payment services is clear and fit for purpose. The discussion document on payment services regulation (Discussion Document) focuses on the need to regulate front-end payment services that offer services directly to consumers and businesses (as opposed to back-end payments infrastructure providers), including both banks and non-bank providers. The Discussion Document is not proposing a regulatory regime; at this stage, MBIE is seeking to understand stakeholder experiences and what outcomes matter most. MBIE will use consultation feedback to advise Ministers on whether any government action is needed, such as changes to laws or regulations, guidance or standards.
Who needs to read it?
This consultation is relevant to banks and non-bank payment service providers, users of payment services (including small businesses), industry bodies, legal and operational advisers, academics, and consumer representative organisations.
What does it cover?
Payment services covered by the consultation include both payment facilitation services and stored value services, offered by both banks and non-bank providers. Here are the key issues raised:
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The current rules are fragmented and unclear: New Zealand does not have a single dedicated set of rules for payment service providers. Instead, different rules may apply depending on what a provider does, how their service is set up, and whether the provider is a bank or a non-bank provider – making it hard for providers and users to work out which rules apply.
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Customer money protection is inconsistent: New Zealand does not have a single statutory regime that sets out how customer money or stored value held by payment service providers must be protected. A common approach used by many non-bank providers is to hold customer money on trust in an account at a bank – but trust arrangements vary widely and may offer uneven protection in practice.
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Three key gaps in consumer and business protections are identified: There is no single framework requiring customer money to be segregated or safeguarded if a non-bank provider fails, setting consistent disclosure requirements across the sector, or establishing baseline expectations for how payment service providers should manage risk and treat users, backed by ongoing supervision and enforcement.
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Digital token payment services need closer attention: Payment services that use digital tokens (such as stablecoins and e-money tokens) are an area of growing activity globally, yet the current New Zealand rules and protections remain limited, fragmented, and difficult to apply consistently in practice. What rules apply can depend on what the token represents and how the product is structured – meaning only baseline or general rules may apply rather than rules designed specifically for payment services. As digital token-based services become more mainstream, the case for clearer, purpose-built rules in this area is strengthening.
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Trans-Tasman alignment is under consideration: Some payment service providers operate across both New Zealand and Australia, or rely on Australian partners, investors, or group structures. Where regulatory approaches differ unnecessarily, firms may face duplicated compliance costs and added complexity. Closer alignment with Australia could reduce these frictions and make it easier for New Zealand-based providers to scale into the Australian market, reducing barriers to cross-border growth.
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Several regulatory models are on offer: Possible approaches range from keeping the status quo while monitoring risks, to making existing rules clearer through guidance, setting baseline legislative rules across all payment service activities, introducing tiered licensing and oversight for some activities, combining approaches, or using co-regulatory or industry standards models.
Our view
The regulatory gap should be closed
New Zealand is one of very few developed countries without a dedicated regulatory framework for payment service providers, and the gap is increasingly hard to justify. Many overseas jurisdictions, including Singapore, the United Kingdom, the European Union, and Australia, already have dedicated licensing, safeguarding, and oversight frameworks for payment service providers.
Regulation supports trust and efficiency across the ecosystem
The payments sector is an increasingly complex and layered ecosystem, and regulatory infrastructure plays an important role, not just in consumer protection, but in building trust and efficiencies amongst all participants in the system. A framework that sets clear expectations for risk management and allocates responsibilities is likely to provide a clearer path for new entrants and enable more efficient integration with back-end providers.
Inaction carries risk
If the status quo remains, there are real risks including slow progress and innovation in payments services, uneven consumer protection and increasing misalignment with overseas jurisdictions, potentially creating inefficiencies in cross-border payments.
A tiered framework is the likely direction
In our view, a fit-for-purpose regulatory framework is a key piece of modern payments infrastructure. We think a tiered, activity-based licensing framework, similar in concept to the Australian and Singapore models, is the most likely eventual direction of travel, drawing on the learnings of jurisdictions that have considered how best to regulate one of the fastest moving industries. The consultation signals that the status quo is not sustainable, and the question is really about the pace and shape of change.
Now is the time to engage
The implications will differ depending on where you sit in the payments ecosystem, but the design choices made at this early stage will determine compliance costs, competitive dynamics, and operating models for years to come. Those operating across the Tasman or with Australian partnerships have a particular interest in how alignment provisions are shaped.
What next?
Submissions on the Discussion Document are due by 3 July 2026. If you are considering making a submission, or wish to understand how developments in payments services regulation might affect your business, please contact one of our experts below. We would be happy to assist with preparing submissions or advising on the potential implications of the proposed regulatory approaches for your operations.
Key contacts
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