Banks in New Zealand will begin processing electronic payments 365 days a year starting next April, although going real-time, always-on payments are years away.
Currently NZ banks only send and settle payment transactions between Mondays and Fridays and not on weekends or public holidays. The settlement usually takes place every half an hour at major banks with payments and then taking an hour or two to reach the bank at the other end of the transaction. Card payments are bundled and processed daily.
Most banks will start processing direct credit, bill payments, automatic payments and direct debits 365 days a year from April 22 next year. This means that individuals and businesses will be able to receive and send electronic payments from their bank account to any other bank account on any day of the year.
Steve Wiggins, chief executive of Payments NZ, the bank-owned company that controls NZ’s core payment systems, told interest.co.nz that making payments 365 days a year “speeds up the economy over the course of seven days.” Will stay and won’t stop on Friday. Get up again in the afternoon and Monday morning.”
“If we look at the value that goes through direct credit, automatic payments, we put more than $1.6 trillion a year through it. So taking that line to seven days a week has a really significant impact. has been lying,” Wiggins says.
What culminates in the move to 365-day payments? SBI365Or settlement before Interchange 365, the project that has been bubbling up for many years.
NZ one of two OECD countries without real-time payments
However, a move to real-time payments remains years away, even though Wiggins acknowledged that NZ is one of just two Organization for Economic Cooperation and Development (OECD) countries that already have real-time payments. Not there. The second country is Israel.
Real-time payments mean that consumers, merchants and financial institutions can pay friends and customers, settle bills and transfer money instantly, 24/7. This means payments can be made exactly where and when needed, which can be especially useful for small businesses, whether online or through an app.
“Real time is definitely on the radar. We certainly envisage that by 2030 consumers will be able to pay in real time, there will be a lot of information, [it’ll be] Data rich. The system will always be on and it will be safe and secure,” Wiggins says.
He says it is important that the real-time payments match the characteristics of the country.
“This is a work in progress and ongoing in terms of what the true outcome is for New Zealand,” Wiggins says. “The work has started but it is still early days in terms of evaluation.”
In a report on Real-Time Payments, Deloitte noted that most current real-time payment systems provide an instant, 24/7, interbank electronic fund transfer service that can be used as one of several channels, including smart phones, tablets, digital wallets, and more. can be started through Internet.
“In such a plan, a low-value real-time payment request is initiated that enables an interbank account-to-account payment fund transfer and secure transaction posting with instant notification features,” says Deloitte.
“Real-time payments can help businesses better manage day-to-day operations by providing financial institutions, merchants, consumers and society with better visibility into payments, enabling better cash management, and improving liquidity. The improvement in liquidity could be particularly impressive. For smaller traders who may be accustomed to waiting days for their settlement, potentially creating a positive impact on their cash flow and daily sales.” Deloitte says.
of australia new payment platform (NTT) has supported real-time account-to-account payments, including payment initiation, withdrawal and settlement, since its launch in February 2018. It was developed one after the other. review of the Australian Payment System by the Reserve Bank of Australia payment system boardWhich is tasked, among other things, to promote competition in the market for payment services, consistent with the overall stability of the financial system.
Payments NZ oversees an autonomous industry, and is owned by ANZ (26.79%), Westpac NZ (22.97%), BNZ (19.4%), ASB (19.11%), Kiwibank (4.74%), TSB (2.60%) Is. HSBC (2.20%), and Citibank (2.19%).
Wiggins says it takes time for a real-time payment system to gain volume, pointing to the Reserve Bank of Australia chart at the foot of this article. It puts NTT transactions behind debit cards, credit cards, direct debits and credit transfers.
“Not everything plays on a real-time platform from day one,” Wiggins says. ,[But] If we look at that short to medium term impact of taking the core system for five to seven days [a week]It would have a significant advantage.”
Ten banks to offer 365-day payments
Meanwhile, 365-days a year payments will begin with the 10 banks that use Payments NZ’s bulk electronic clearing system on board. This includes eight Payments NZ shareholders, plus Bank of China and Industrial and Commercial Bank of China.
Wiggins says other banks such as Rabobank, Heartland Bank, SBS Bank and The Co-Operative Bank need to have commercial arrangements with their agent banks that settle for them, such as BNZ and Westpac, if they can do 365- Provide time of day. year payment.
He believes that the process of electronic payments every day of the year will boost competition.
“There will certainly be more opportunities for competitive plays which may not have been available on the first weekend or statutory holidays due to lack of payment. So I think there may be some innovation that follows that and as a result of that is,” Wiggins says.
He says time will tell how participants and customers want to use the new service, and whether there is an overall increase in payment volume, or whether existing payment volume will be spread out over more days.
*In a series of articles on New Zealand’s retail payment system in 2020, I called for a move to real-time payments Considering this may negate the need for payment terminals and the interchange of Visa and MasterCard, the likes of smartphones promote payments.