Our Commerce Commission application: an explainer

In January, the Commerce Commission published an application from Payments NZ for an authorisation under the Commerce Act. 

We know from talking with the industry that there’s a lot of interest in our application and what it means, so we’re sharing this explainer to set out what we’re asking for and why. 

What is Payments NZ applying for? 

We’re seeking the Commission’s approval to work with open banking stakeholders to make partnering clearer and simpler for banks and third parties.  

A new partnering framework would include an API Centre accreditation scheme, and default standard terms and conditions for banks and third parties to use. 

We’re confident this type of partnering framework will make it easier for third parties to work with banks, which will accelerate the delivery of open banking in Aotearoa. 

You can read our application, the Commerce Commission’s statement of preliminary issues, and other related documents on the Commission’s website here.   

What would this authorisation mean for open banking? 

At present, banks and third parties must reach individual agreements around the delivery of open banking solutions. This can make partnering difficult and costly because of the requirement to negotiate one-on-one and meet individual requirements before connecting with each other. 

Under the proposed framework, an accreditation scheme would be created that would ensure accredited third parties have the right to partner with banks using standard terms and conditions. 

Why is Payments NZ seeking to do this? 

We want to accelerate open banking and overcome barriers that are stopping it from reaching its full potential. 

We believe the industry needs a new type of partnering framework, based on consistent feedback the API Centre has received through consultation with banks and third parties.  

We think the work we’re doing will provide a solid base for any future regulation that the Government might consider. 

Would everyone have to use the proposed framework? 

Banks and third parties are already able to partner using their own standards, independently of the API Centre. This wouldn’t change if our application was approved.  

The proposed partnering framework would only relate to Standards developed by our API Centre, and would not be mandatory.  Existing individual agreements would be unaffected, and third parties and banks could choose to make new individual agreements outside of the partnering framework, if preferred. 

What happens if the application is declined? 

Without the proposed partnering framework, banks and third parties will have to keep negotiating individual open banking agreements. 

How does this relate to the Customer and Product Data Bill? 

We believe that our application and the proposed partnering framework can support the work being done on the Customer and Product Data Bill, and potentially provide a foundation to move that work forward. 

Why doesn’t the application address pricing?  

Our application doesn’t seek authorisation for individual pricing to be set. We think having consistent pricing structures and principles will achieve the objective of fair and transparent pricing that does not unduly restrict access. 

Why is the API Centre the right organisation to lead this piece of work? 

At Payments NZ our focus has always been working across the industry to put the right foundations in place so that banks and third parties can deliver open banking.  

We’ve iterated a number of open banking standards which have now been adopted in market for use by consumers. 

A partnering framework will build on the work we’ve already done and make it easier for banks and third parties to work together. 

Our wider work to accelerate open banking

We’re committed to accelerating open banking in Aotearoa New Zealand including through the ongoing development of API Standards. Our API Centre released the latest version of its standards last month.  

The industry is also working towards a key milestone in May, when the four largest banks are required to be ready to partner using our v2.1 Payment Initiation API Standard. The v2.1 Account Information API Standard will also follow by November.  

We’re continuing to facilitate industry collaboration and set future industry implementation plans for open banking. 

In November last year we released a white paper on the future of open banking in Aotearoa. The paper put forward the view that industry co-ordination through the API Centre, coupled with right-sized customer and product data regulation, can speed up the development of the open banking ecosystem, which benefits New Zealanders.