Modernising retail payments system may boost economy by up to $1.3b a year
By Corin Dann of RNZ
New modelling from the Reserve Bank suggests overhauling the country’s outdated retail payments system could boost the economy by between $700 million and $1.3 billion a year.
The bank has today released a new issues paper on modernising the payments system.
In it, the bank says about $2 trillion in retail payments flows between New Zealand banks each year and, given the scale of payments, even small improvements can lift national productivity, enhance innovation and global competitiveness, and strengthen economic resilience.
The main payment systems in New Zealand include Eftpos, debit cards, credit cards and bank transfers.
The paper says New Zealand’s payments system remained reliable for many users, but was increasingly falling behind global standards, with structural issues also slowing further modernisation.
It says reform of the system could benefit consumers by providing convenience and choice of payment methods, and access to modern features such as instant payments, request-to-pay and QR codes.
Any reform could also provide better protection against scams and fraud, according to the bank.
The issues paper notes performance and capability gaps, including a reliance on legacy platforms, are restricting competition and innovation.
It says the payments system also lacks modern features seen in other set-ups around the world and not having a domestic system poses risks to the country’s economic resilience.
New Zealand’s banks and financial institutions have drawn criticism in recent years from organisations such as Consumer NZ for not moving quickly enough to enable open banking, which allows third-party apps to use people’s banking data for bank-to-bank payment transfers.
The report also identifies a lack of leadership on the payments issue, saying no entity has a strategic mandate to provide system-wide leadership.
The Reserve Bank is now inviting submissions on the issues paper and possible changes to the system.
This will include looking at the technical and platform requirements needed to modernise the payments infrastructure, as well as what leadership changes are required across the sector.
The work is being done with the support of the Finance Minister.
This story was first published on rnz.co.nz
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