This is the first edition of our company update where we’ll keep you informed about the work we’re doing with industry to make payments simple and secure for Kiwis.

Payments Direction update

We’ve made significant developments with much of our Payments Direction programme of work. Soon you’ll be able to start following activity within the programme and six workstreams through a new Payments Direction journal on our website. There you’ll find regular updates about what the working groups have been focusing on. If you’re subscribed to our mailing list, we’ll let you know once the journal is up and running.

You may remember that back in March, as part of our work in developing a shared API framework for common payments related APIs, we launched our industry pilot to test the viability of two API standards: Account Information and Payment Initiation. You can find more information about the shared API framework and pilot, including who’s involved, on the Payments Direction API framework page.

The pilot development partners are now well advanced in their build of the standards and will shortly begin deploying these within the development partner group. The pilot approach has meant we’ve been able to take learnings from on the ground to improve specifications within the standards. This has helped us gain a better understanding of the various business functions the APIs can enable, and helped to inform the design of the framework.

One of the early outcomes from the pilot has been the identification by the pilot working group of an additional API that would introduce enduring consent management. This new API standard is now being developed in parallel with the two pilot APIs.

For the last few months, a working group has been busy developing a shared API framework, which will set out how organisations (including API providers and third parties) can access the standards, use them in market, and contribute to their ongoing development.

The group is working on 15 key areas of the framework. As part of this work, we’ll be running a series of workshops in early-mid September, where we’ll be asking a range of organisations from across the ecosystem to come along and share their views on the API framework and standards. We’ll be using this feedback to help further refine and shape the framework.

We’re making great progress with our other Payments Direction workstreams too.

The proxy identifier working group recently completed their investigation into using proxies to enable bank accounts to be pinpointed without the need for account details. Many financial institutions currently offer these types of services for transactions between their own customers, but there is no industry-wide solution available. This working group has been considering what shape an industry-wide solution could take, how it might operate, and how it could better enable payments and other services. We continue to work on possible technical solution delivery models, which will involve some upcoming market testing and developing a technical blueprint.

The speeding up workstream is nearing completion of the first investigative cycle, which looks into “how fast is fast enough” when it comes to electronic credit payments, and clearing and settlement systems in New Zealand. The working group has been looking at the technology and other constraints within the current system and identifying other ways to speed up domestic payments. We will be able to recommend next steps at the end of the investigation.

The final two workstreams: request to pay and informative transactions, both have strong linkages to the other workstreams and are temporarily on hold while the industry focuses on delivering the key system infrastructure projects mentioned above. We’ll be revisiting these two workstreams in 2019.

Management Committees update

Our four clearing system Management Committees - Bulk Electronic (BECS), Consumer Electronic (CECS), High Value (HVCS) and Paper (PCS) - continue to be focused on enabling the interoperability and efficiency of those systems.

This year the committees have been setting out improvements with our rules drafting process, new risk and compliance processes, and risk mapping of various payments instruments.

BECS, as the governance body for our core retail payments system Settlement Before Interchange (SBI), recently took over the governance of the Payments Direction Service Availability workstream. This work has now been renamed to ’SBI365’ to better reflect what we want to achieve. BECS will look to complete business requirements, draft rules, and set a change and implementation timetable for the move to 365-day processing.

CECS are getting closer to finalising a new clearing system dashboard for our Participants and Members that will include information on the trends in types of card payments over time. We’ll be collating some of this information which will be released as part of our annual payment stats ‘year in review’.

We also look forward to welcoming China Construction Bank via an agency agreement and the Bank of China into BECS soon.

Regulatory radar

We continue to work with regulators to keep them informed of developments which are likely to impact the payments system.

Reserve Bank of New Zealand (RBNZ)

BECS and HVCS have been working with the RBNZ’s Exchange Settlement Account System (ESAS) replacement and change programme. The new ESAS is fundamental to New Zealand’s payment clearing and settlement systems, and will also have improved functionality, which will help to enable industry initiatives such as the move to 365-day processing.

CECS has been working on providing the RBNZ with information regarding system resiliency within the point-of-sale market.

The RBNZ have indicated they will soon be publishing an exposure draft for new oversight powers legislation for financial market infrastructures. They indicated in earlier consultation papers that the SBI system, which we govern, is considered by them to be a systemically important financial market infrastructure and may fall within the new oversight powers legislation.

Government

As you may recall, we were asked to provide a formal response to the Minister of Commerce and Consumer Affairs Kris Faafoi on areas of concern affecting our payments ecosystem, which we did in April. Minister Faafoi also accepted our invitation to address the delegation at our conference in June. In his address he set out his expectations in respect of payments and the wider industry over the next few years. You can watch the video of the Minister’s speech given at our conference.

The Minister maintains a strong interest in the areas of open banking, and innovations that offer low-cost payment options. We continue to meet with and provide regular updates to both MBIE and RBNZ.

Making connections

Our Payments NZ team are always out and about meeting with various industry stakeholders. Here are some of the events you can catch us at in the next quarter:

  • Early - mid September: Payments Direction market testing workshops.
  • 17 - 18 September: Jane Retimana and Steve attending the P7 Asia Pacific Association Forum. 
  • 28 September: Jane speaking at the MYOB Partner Connect event.
  • 22 – 25 October: Steve judging Student Challenge session at SIBOS.
  • Late October: our The Hub event, location tbc.
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