As we move towards the last quarter of 2022, good progress is being made across our work programmes and some significant milestones achieved. Read more about these developments below.

Payments Direction

We’ve reached a significant milestone in assessing the potential for real-time payments in Aotearoa New Zealand. This work that we’ve been doing with the industry as part of our payments modernisation plan has confirmed that real-time payments capability is one of the key cornerstones of modernising Aotearoa’s payments system. We’ll now be leading further industry discussions around how best to progress real-time payments capability for our domestic market and conditions.

Our real-time payments workstream started with a market information gathering exercise, which showed that real-time payments infrastructure can deliver a range of long-term benefits for the country. Through this exercise we collected expert input from organisations who have delivered real-time capabilities around the world. Analysis of the material showed that the immediate transfer of funds between bank accounts speeds up the flow of money around the economy, can improve access for innovators, and the ability to have richer payment information flows will deliver improved choice and efficiency for consumers.

Another key insight we drew was that inclusive, high quality real-time infrastructure is a strategic and enduring investment in the future of a country. So this work is a long-term project that will have wide-ranging implications across many industries and our economy. To realise this key capability for Aotearoa, we’ll require input along the way from a broad range of stakeholders.

In the coming months we’ll start to engage more broadly with the wider Aotearoa payments ecosystem. This will start with the release of a discussion document that explores in more detail the work we have done so far. We’ll be inviting feedback and comments on this document, and welcome any thoughts on demand, features, and the configuration options of a potential real-time payments system in Aotearoa. Alongside this, 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. Anyone with an interest in this work can register online now to receive a copy of the discussion document when it’s released.

In the meantime, we’ll continue to work with Participants of our clearing systems and share global real-time use cases and best practise to help inform what we do here in Aotearoa. We encourage those who have been involved in this work so far to look out for the discussion paper in their inboxes soon, along with options for how they can be further involved. We’ll also be conducting in-person roadshows further down the track where the wider ecosystem can come along to hear more about this work and share their views.

Outside of the real-time project, our Payments Direction team is in the process of finalising our 2022 Environmental Scan refresh. We’re also looking at conducting another consumer research survey, which will be an update on our last survey published in 2020.

Clearing systems

The ISO20022 project is on track for its November launch, with our High Value Clearing System (HVCS) Participants having commenced industry testing. The industry shift to the ISO20022 messaging format signals a significant change for the payments system in Aotearoa, as it means all HVCS, and cross-border transactions will be upgraded to a new messaging standard that makes it easier to streamline financial communication between people and systems.

We were also pleased to recently announce the implementation timeline for SBI365. This is another major core payments system project which will extend the processing of electronic payments to 365 days a year and will start being available in Aotearoa from 22 April 2023. The change represents a further evolution of Aotearoa’s payments system, enabling more flexibility for individuals and businesses to pay or be paid any day they want, including weekends and public holidays.

We encourage all businesses and payment service providers to start thinking about what implementing 365-day payments could mean for their organisations, internal processes, and customers. Participating banks are currently working through their solutions and will be in touch with their customers to provide more details as the change is rolled out. The banks who are part of this system change are ANZ, ASB, Bank of China, BNZ, Citi, HSBC, ICBC, Kiwibank, TSB and Westpac. You can find out more in our article and Q&As.

API Centre

At the end of June, we concurrently released versions 2.2 and 2.3 of the API Centre’s standards for Account Information and Payment Initiation. These latest version standards have also been made available in our sandbox, powered by Middleware NZ, for all Community Contributors and Standards Users to use to test their innovations. And we’ve updated our Customer Experience Guidelines to reflect the changes made for v2.2. and v2.3. Our API standards continue to play an important role in streamlining the development of open banking products and services in Aotearoa. You can read our release article to find out more detail about what’s in these latest standards versions.

Another significant piece of work the centre has been progressing is how open banking could accommodate scenarios where a bank account has more than one signatory, which could be business banking accounts, charities, or trusts. There are added complexities and considerations when it comes to handling the safety and security of these accounts in an open banking environment.

We have now gone out to the centre’s Standards Users and Community Contributors to propose a principles-based approach anchored in current banking, payments, and customer consented data sharing practises. We’re calling this approach the ‘open banking equivalency principles’, a term which was coined in the UK. Once we’ve gathered their feedback, we’ll establish a customer-focused framework for how to grow consumer confidence and trust in consented data sharing and payment initiation through Third Parties.

We’re also closely following the development of Aotearoa’s Consumer Data Right (CDR). The government has previously indicated that they expect a draft Bill to implement the CDR to be introduced to Parliament in 2022, so we’re waiting to see how that shapes up and what the implications could be for the centre and ecosystem. In the meantime, we’ve been actively engaging with and are always on the look-out for more opportunities to give input into the development and implementation of the CDR. As leaders in open banking in Aotearoa, we have work underway already in many areas likely to be covered in the legislative framework, such as API standards, guidelines, streamlined partnering, sandbox, API Centre register and much more.

Our open banking community continues to grow, demonstrating a strong desire from businesses and individuals to be part of the API Centre’s work. The centre currently has 8 API Provider and 16 Third Party Standards Users and 160 Community Contributors. We encourage all organisations and individuals with an interest in building and shaping Aotearoa’s open banking future to learn more about the API Centre, including how they can get involved.

Regulatory radar

There have been no further developments in relation to the implementation of the Financial Market Infrastructures (FMI) Act 2021. However, we anticipate that the Reserve Bank of New Zealand (RBNZ) will issue a notice to Payments NZ seeking information to enable it to determine the systemic importance of two of our payment systems which are likely to be considered for designation – Settlement Before Interchange (SBI), and the High Value Clearing System (HVCS). Following this, the RBNZ will release an exposure draft of the standards to be issued for designated FMIs.

If you’re interested in finding out more about our views on various regulatory matters related to payments, see the government and regulatory submissions we’ve made.

Making connections

It’s been refreshing being able to come back together and connect with the industry in-person as well as online this year. We’ve run a couple more events since our last update and we’re looking forward to our much-anticipated flagship conference in November.

In May, the API Centre ran a free one-hour webinar as part of Techweek 2022 where anyone with an interest in open banking could learn more about the future of open banking in Aotearoa and the work of the centre. We had a lot of interest in the online event, with more than 350 people registered to listen to our speakers – Phil Cass, our API Centre Manager, Gavin Wong, API Centre Lead Architect and Jamie Leach, Chapter Lead at FDATA A&NZ. The webinar covered a lot of ground from how API standards operate in an open banking environment, to what open banking means for customers and discussions around the upcoming Consumer Data Right in Aotearoa. If you missed the session or would like a recap, you can read our summary or watch the recording on the API Centre website.

We were also pleased to be able to hold another in-person Strategic Forum for our Participants and Members in July. Our guest speaker was popular UK author, advisor, and commentator on digital financial services Dave Birch. He provided an update on developments in the central bank digital currency (CBDC) space, looking at the relationship between CBDCs, digital ID, open banking, real-time payments and more. We had over 30 representatives from our Participant and Member organisations attend.

Planning and programme development is now well underway for our flagship conference for the Aotearoa payments industry, The Point 2022. This year’s conference will be a full day in-person conference and Gala Dinner at the Auckland War Memorial Museum on Wednesday 9 November, followed by online deep dive sessions on Thursday 10 November.

Our theme this year is: Reframing the future. Over two days, thought leaders, visionaries and disruptors from around the world will traverse all the pertinent topics that are, and will, shape the future of payments in Aotearoa.

We have an impressive line-up of international keynote speakers confirmed who will be covering a range of hot topics including trust, economic and payment trends and the future of the customer. On the local speakers front, we’ve confirmed the Minister of Commerce and Consumer Affairs, RBNZ’s Assistant Governor/General Manager Economics, Financial Markets and Banking, and the Commissioner of the Commerce Commission. Our MC on day one will be TV and Radio Reporter and Presenter, Jack Tame. We’ll be announcing more speakers and programme details as they are confirmed so make sure you sign up to our mailing list.

We’d also like to take this opportunity to thank our sponsors for supporting The Point 2022 – SWIFT, Mastercard, FIS, Worldline, Buddle Findlay, ACI Worldwide, ICBC and Middleware Group. If you’d like to talk to us about sponsorship opportunities for The Point 2022, email our Events Manager for more information.