Real-Time Payments: Next Stop New Zealand

September 22, 2022
Payments NZ, the operator of New Zealand’s core payments system, has set its sights on real-time payments as the next chapter in the country’s payments modernisation journey.

Payments NZ, the operator of New Zealand’s core payments system, has set its sights on real-time payments as the next chapter in the country’s payments modernisation journey.

In a guest post for Blue Notes, the online newsroom of ANZ bank, Payments NZ CEO Steve Wiggins described real-time payments as a “key cornerstone” of modernising the country’s payment system.

Wiggins said Payments NZ has been working with existing providers of real-time payments infrastructure on the best way to implement it in New Zealand, and will soon be opening up these discussions to input and feedback from a wider audience.

“Our real-time payments workstream started with an information gathering exercise which showed real-time payments infrastructure can deliver a range of long-term benefits for the country,” said Wiggins.

“We collected input from organisations who have delivered real-time capabilities around the world.

“Analysis showed the immediate transfer of funds between bank accounts speeds up the flow of money around the economy and can improve access for innovators, while the ability to have richer payment information flows will deliver improved choice and efficiency for consumers.”

In the coming months, Wiggins said Payments NZ will publish a discussion paper that explores in more detail the research that it has carried out on real-time payments so far.

Further data and guidance will then be gathered in relation to potential demand, features and configuration options of a New Zealand real-time payments system.

“We’ll also start to consider the structures required to govern and manage real-time infrastructure — including key areas such as privacy, security, access, interoperability, efficiency and cost-effectiveness,” said Wiggins.

“Interested parties can register online now to receive a copy of the discussion document.”

In the meantime, Wiggins said Payments NZ will continue to work with clearing system participants and share global use cases and best practices of real-time payment systems.

In June, Payments NZ also announced that its electronic payments systems will be moving to 24/7 operation in April 2023.

By moving payments to always-on 24/7, “businesses providing services over weekends and public holidays could see improved cash flow”, said Payments NZ.

“Extending availability will also create opportunities for more innovation, allowing businesses to have the opportunity to look at ways to innovate within their business model.”

Currently, the banks that will be part of the system change are ANZ, ASB, Bank of China, BNZ, Citi, HSBC, ICBC, Kiwibank, TSB and Westpac.

Unlocking future capabilities

Both 24/7 operations and the introduction of real-time payments are part of a ten-year strategy to modernise New Zealand’s payments system known as Payments Direction.

Overseen by Payments NZ, Wiggins said its main focus this year is to finalise its work on a long-term roadmap for all payments systems up until 2030.

The key themes and objectives have already been touched on in the Payments Modernisation Plan (PMP) discussion paper published by Payments NZ in 2020.

In the PMP, real-time payments is one of the four base-layer “building blocks” of future capability, alongside “secure partnering”, “richer data” and “payee identifiers”.

On top of these four blocks comes “greater payment choices”, “improved fraud solutions” and “simple verification”, followed by “cross-border convenience” and “value-added applications” one layer above.

“By 2030, customers are highly likely to want world-class, safe and secure real-time payment experiences that are also data-rich,” the report notes.

Payments NZ is confident that real-time domestic payments will optimise and unlock new capabilities for New Zealand’s cross-border payments system.

“A shift to fast domestic account-to-account payment services will morph into real-time payments,” it said in the PMP report.

“Global technology platforms and their enabling technologies and capabilities will play a more substantial role in delivering real-time payment experiences.

“[And] end users will not notice a material difference between the end-to-end speed of their domestic vs cross-border payment experience.”

Other hoped-for benefits of an ideal real-time payments system include: user choice over which account a real-time payment is made from; notifications that funds are available for use by the payee; consolidation of bill payment solutions; and instant delivery of government assistance to individuals.

By opening up the real-time payment system to these end-goals, Payments NZ also expects to see a “broadening mix” of industry players working together in a larger ecosystem.

In turn, this will enable the provision of services such as third-party access to account data — also known as open banking — and non-bank access to real-time systems.

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