"Now is the time to act" – Reserve Bank seeks feedback on modernising New Zealand’s retail payment system

The Reserve Bank has published a strong statement on the need to modernise New Zealand’s retail payment systems or risk “becoming less competitive and less connected to the global economy”.

The Modernising New Zealand’s Retail Payment System Issues Paper has just been released for feedback and sets out specific concerns the Reserve Bank has identified with New Zealand’s retail payment system, along with proposed areas of work needed to address those concerns.

Submissions on the Issues Paper are open until 27 October 2026.

What is this about?

The Issues Paper states that the Minister of Finance has endorsed the Reserve Bank “leading efforts to deliver the strategy for payments modernisation in New Zealand”.

To achieve this, the Reserve Bank says it has set up two linked workstreams:

• Modernising New Zealand’s domestic retail payments platform: Examining the technical and platform requirements needed to modernise the payment/platform infrastructure (including cross-border capability) to inform the further development of options.

• Legal and governance arrangements: Examining the current legal and governance frameworks focusing on strategic leadership reform, regulatory co-ordination and system governance across the retail payment system.

The Issues Paper focuses on testing the overarching case for change and the key legal and governance issues. However, the Reserve Bank says that work on platform modernisation is progressing through its early stages in parallel, and some early thinking on that topic is also discussed in the Issues Paper.

Key issues with the retail payment system

The Reserve Bank has identified that – while New Zealand’s retail payment system remains reliable for many users – it has structural issues that are hindering modernisation:

System performance and capability gaps

Reliance on legacy platforms, which restricts competition and innovation – New Zealand’s payment system is dominated by a small number of major incumbents. New entrants to the market route their services through platforms controlled by these incumbent providers. These structural issues can create barriers even without intentional anti-competitive conduct. Fragmentation also reinforces barriers to access, competition and innovation, as participants depend on co-ordinated and voluntary access to multiple system layers controlled by different parties.

Lack of modern features seen in other systems worldwide – New Zealand is the only OECD country without a committed plan to implement real-time retail payments and will soon be the only developed country without a fast payments system. Other modern features, such as modern point-of-interaction methods like QR code or NFC (“tap and go”) payments, remain limited. Modern fraud and scam prevention features have been slow to develop – Payments NZ reported approximately $265 million lost to scams from NZ bank accounts in the 12 months to November 2025. New Zealand’s current system is not set up to participate in global initiatives to improve cross-border payment times, or to adapt effectively to the challenges and opportunities posed by emerging payment technologies.

Risks to economic resilience and sovereignty – New Zealand's payment system currently depends heavily on a small number of offshore-controlled global card schemes, with EFTPOS remaining the country's only domestic payment platform. This reliance on offshore providers increases New Zealand's exposure to disruption, cost changes and policy decisions made outside New Zealand's control. The development of a modern domestic payment platform will provide an alternative to global card schemes, which will create more meaningful competition, strengthen economic resilience and support financial stability.

Strategic leadership gap, fragmentation and misaligned incentives

No entity with mandate to provide system wide strategic leadership – New Zealand currently lacks a single authority (or a co-ordinated group of authorities), either at an agency or government level, with the explicit mandate to deliver strategic leadership. This fails to recognise the important role of Government in leading – or strongly steering – payment system modernisation. Without strong strategic leadership across the public and private sectors, New Zealand will remain out of step with global developments and unable to effectively support a modern digital economy.

Fragmented regulatory framework difficult to navigate – New Zealand’s payments regulation sits across several institutions and seven pieces of legislation. Each regulator has its own mandate and powers, but there is no system-level description of roles and responsibilities. This can make the framework difficult to understand and navigate, particularly for new entrants. Fragmented policy mandates also make it more challenging to develop new regulatory frameworks. The effectiveness of regulatory action often depends on complementary actions by other regulators.

Incentives misaligned with broader public interest objectives – The current allocation of roles and responsibilities across New Zealand’s payment system has resulted in a lack of clear long-term stewardship, limited public sector oversight and participation, challenges with advancing system-wide initiatives, and decision-making that reflects priorities that do not always align with broader, economy-wide goals such as resilience, competition and inclusion.

The case for change

Indicative analysis by the Reserve Bank suggests that payments modernisation could deliver economic benefits to New Zealand of $0.7 billion–$1.3 billion, or 0.16%–0.30% of GDP. These benefits include both direct savings, and wider productivity gains because of stronger competition, increased innovation and reduced transaction costs.

For individuals and businesses, this could mean more convenience and choice of payment methods – including modern features such as instant payments – as well as faster and easier cross-border payments and better protection against scams and fraud. For those wanting to participate in the sector, modernisation should result in lower barriers to entry for new participants, reduced single points of failure, faster time-to-market for new products and services, and shared fraud intelligence and common security standards. The Reserve Bank predicts that modernising the retail payments system will also lead to system-wide benefits for the New Zealand economy, including faster recovery from shocks and outages, lower public harm from fraud, and higher public trust and confidence.

Conversely, without modernisation, the Reserve Bank anticipates that:

• Costs will continue to rise, and payment choices will narrow, particularly for individuals and businesses that rely on EFTPOS and cash;

• Innovation will stall, leaving New Zealand further behind international standards;

• Systemic risk will increase, and public trust and resilience will weaken; and

• Regulatory interventions will remain costly and largely incomplete.

Legal and governance reforms

So, what does the Reserve Bank propose?

In the Issues Paper, the Reserve Bank identifies three core areas of reform as needed:

1. Effective leadership with a clear mandate and accountability – A lead agency (or set of agencies) empowered to set the long-term direction for the payment system, make system-level trade-offs, seek input from and co-ordinate actions across government, regulators and industry, and champion national objectives such as resilience, competition, innovation, inclusion and economic sovereignty.

2. A clear, consistent and coherent regulatory framework – A modern payment system with a regulatory framework that is easy for participants (especially new entrants) to navigate, aligns across agencies to avoid gaps, overlaps and conflicting requirements, and has mechanisms for proactive stewardship, monitoring and accountability for system-level outcomes.

3. Governance arrangements that safeguard platform and infrastructure decisions – Reform to ensure that governance structures reflect broader sectoral and public interest objectives, that critical infrastructure is overseen by entities with the capability, mandate and incentives to deliver national scale modernisation, and that decisions on access, standards, investment and interoperability support competition, innovation and resilience.

The Reserve Bank says that it is still at an early stage of considering the policy options that could support this reform. It has identified a “spectrum of options”, informed by other jurisdictions such as Australia and the United Kingdom. It is not seeking to evaluate the potential options at this stage – rather, it wants to ensure that the criteria for considering the options are “robust and well-tailored”. Specific reform proposals and a cost-benefit analysis will form part of future phases of public consultation.

Looking for feedback

To achieve this, the Reserve Bank is seeking feedback, and the Issues Paper includes specific questions that the Reserve Bank would like submissions on.

As we have written about before, the Ministry of Business, Innovation and Employment has also recently consulted on whether New Zealand's rules for payment services providers are clear and fit for purpose. The Reserve Bank says this work is intended to complement its payments modernisation programme.

It also says that it will be co-ordinating with other key agencies (such as Treasury, the Commerce Commission and the Financial Markets Authority) and that “a close working relationship with industry will be fundamental to the success of this initiative”.

Given the Reserve Bank’s stated intent to give Ministers advice in "the first half of next year" (2027), this is a rare, foundation stage consultation before specific policy options are on the table. If you would like to discuss the consultation or get assistance preparing a submission, please get in touch with our team.