What is it?
Payments Direction is our cornerstone strategic initiative set up in 2015 to understand the evolving future of payments. We are working collaboratively with the industry to identify what needs to be done to contribute to and prepare for that future.
Why are we doing it?
As the pace of change in financial services has increased over the past few years it has become vitally important that organisations and industries stay informed and plan for the future. This is especially important for networked systems like payments, where overall efficiency and interoperability are fundamental.
Our vision is to enable the world’s most progressive payments ecosystem while ensuring payments are simple and secure for Kiwis. We want Kiwis to be able to pay who they want, when they want and how they want. Payments Direction is our vehicle to assist the industry to consider the future and work together on strategic opportunities which keep up with the pace of change and to deliver our vision.
New Zealand's payments industry unique. Ours is one of the few around the world where this type of long-term strategic initiative is industry lead and facilitated, rather than being driven by regulatory policy.
What have we done?
Research and Insights
The early stages of the initiative focussed on researching payments trends and issues and collecting insights from a range of payments stakeholders and users, see 2015 Environmental scan and 2015 Consumer insights reports. That research and insight then helped inform our Payments 2025 report on how the future of New Zealand’s payments ecosystem was likely to take shape.
In Payments 2025, we identified eight key factors that would drive the shape of our local ecosystem:
- Speed and availability: Call to make faster payments more widely available, more of the time.
- Information: Need to deliver more informative transactions to people and organisations.
- Leverage through collaboration: Broadening of involvement in payments innovation.
- Scale and power: Effect of non-traditional players with scale and power.
- Regulation: Increasing involvement of regulators and policy makers.
- Simplification: Need to simplify payment systems and improve interoperability across the payments ecosystem.
- Internationalisation: Move towards simplifying and making cross-border payments intuitive
- The new sandpit: Possibility of a game changing new way of making payments.
Since those initial reports were produced, we have continued to keep up to date with payments trends and strategic issues through ongoing research and insights investigations. We completed a shorter refresh of the environmental scan in 2016, the 2016 Environmental scan report, which continued to support our future view of the payments ecosystem.
In 2017, we have completed a more substantive environmental scan report and commissioned a consumer insights report. The 2017 environmental scan continues to support the themes we previously identified as shaping the future of payments. However, due to the rapidly changing technology environment in 2017, a new theme has been identified: Payments security and authorisation.
The 'payments security and authorisation' theme has come to light as the need to ensure confidence in payments in the face of a new and rapidly changing set of risks has become a critical issue across the payments ecosystem. This more visible emphasis on security is driven by the increasingly varied way we make and receive payments and by a new range of security related initiatives that are under development across the globe. Drivers include:
- Customers’ security concerns about the impact of fraud on online commerce.
- More complex components of security and authentication, which create new sources of risk, some of which are difficult to anticipate.
- Emerging payments security technology opening new ways to deliver enhanced security and authentication solutions.
- A recognition security and authentication are increasingly pan jurisdiction issues.
A number of other notable developments and shifts in emphasis have occurred since our original scan. Some examples of these are:
- The growth of the Internet of Things (IoT) and its related and enabling technologies.
- The rise of the application programming interface (API) economy.
- An increased emphasis on the importance of international standards.
- The power of rapidly shifting consumer and market expectations, driven in particular by the proliferation of mobile devices.
- Ever faster payments, including a surge of real-time payment platforms being developed.
- A more complex and diverse payments ecosystem membership.
- Growing regulatory and central bank action and thought leadership.
- The automation and integration of payments, embedded into other activities.
- Heightened payments security risks, with new innovative risk management technologies.
These changes are explored in the 2017 Environmental Assessment Report, which will be released along with our 2017 Consumer Insights report soon.
As an industry it is important that we stay on top of payments trends and issues. We will continue our research and insights work to stay on top of how the future of New Zealand’s payments ecosystem might evolve, and you can expect to hear more about this from us as our work continues.
A core objective of Payments Direction is to work with and seek advice from the industry: our Participants and Members, reps from across the wider ecosystem, and the regulator. We have engaged extensively with industry since the initiative was launched.
In late 2015 and early 2016, the majority of Payments Direction activity was to frame up the key strategic areas of focus for our roadmap development. The five key strategic areas of focus for Payments Direction are:
- Simple payments: More flexible and modular; streamlined, efficient payments processing; enables innovation; supports a great customer experience; partnerships between existing and new players.
- Fast (as) payments: Fast account-to-account payments service; interoperable rails; industry players able to leverage fast payments service to create fit for purpose solutions.
- Informative transactions: More information can be sent with a payment; payments rails that support richer messaging; enables data driven innovation and new value propositions.
- Just right regulation: Regulation remains ‘right sized’ to our market; dynamic network continues to innovate and to ensure the integrity of the system; confidence in payments instruments remains high with users and regulators.
- International payments: Cross-border payments experience - simple, intuitive and straightforward; evolve in response to international trade, economic relationships and an increase in global remittances.
Using the strategic areas of focus for guidance, workshops and meetings were then held with a wide range of ecosystem players to identify and refine opportunities where collaborative industry activity would be of value. From a long list of potential opportunities, six were identified to be further investigated during 2017-18.
- Simple payments - API Framework
- Fast (as) payments - Service availability
- Simple payments - Proxy identifier
- Informative transactions - ISO 20022 messaging
- Simple Payments - Request to pay
- Fast (as) Payments – Speeding up payments
What are we doing at the moment?
After engagement with our key stakeholders, the Payments Direction work programme for 2017 was set to focus on opportunities where payments interoperability could be of significant benefit. The four opportunities we are currently working on are:
- A shared API framework
- 365 day service availability for existing systems
- Proxy used to identify bank account
- ISO 20022 payments messaging format
We are working with a number of working and governance groups, made up of industry representatives, to frame up and investigate the viability of each of the four opportunities. No decisions have been made yet in respect of the eventual implementation of the opportunities. As decisions are made by the industry around the progression of each opportunity we will let you know.
We are also continuing to keep an eye on the future and to make sure we don’t miss any other opportunities that could benefit from collaborative industry activity. We have set up and Industry Advisory Group, made up of our Participants and Members, to help us with this. This group has been set up to provide advice specifically to the Payments Direction programme.
Want to know more or get involved?
If you work at one of our Participant or Member organisations, it's likely you have colleagues connected to or working directly with our programme. Ask your colleagues about how you can get involved or learn more, or contact us.
If you are part of the wider payments ecosystem and want to know more about what we are doing, please feel free to contact us.