Ministry of Business, Innovation and Employment asks whether payment services regulation is fit for purpose

The Ministry of Business, Innovation and Employment (MBIE) has opened consultation on whether payment services regulation is fit for purpose.

MBIE has issued a discussion document with the foreword from Commerce and Consumer Affairs Minister Cameron Brewer.

"Payment services are evolving quickly, and this is the right time to ask whether New Zealand’s current settings remain clear and fit for purpose," Brewer says.

"This discussion document does not put forward decisions or preferred options. It is an opportunity to hear from consumers, businesses and payment service providers about what is working well, where there are gaps or uncertainty, and what matters most in practice."

Jenna Reid, MBIE’s acting general manager for commerce, consumer and business policy, says payment services letting individual and businesses make and receive payments, are a core part of the financial system. They've traditionally included Eftpos, credit cards, cheques and cash, with alternative payment options now available.

"For consumers, payment services might now mean using a digital wallet to buy their morning coffee or using an app to transfer money from their bank account to their plumber’s. For businesses, it could be the platform they use to take online payments or pay their staff," says Reid.

"Given how much payment services have changed in recent years, it’s timely to look at the rules covering the businesses that provide them. These include banks and non-bank businesses like fintechs."

Questions being asked in the consultation include;

• Do the current rules around payment services support competition and innovation or are they creating unnecessary barriers?
• Are the current protections for consumers and businesses clear and fit for purpose?
• Do newer payment models such as the use of digital tokens like stablecoins raise issues the current rules don’t address?

Reid notes both the Finance and Expenditure Committee’s inquiry into banking competition and the Commerce Commission’s market study into personal banking services highlighted the importance of reducing barriers to newer payment providers to help boost competition and give New Zealanders more choice.

"One barrier may be the array of rules for providers, which can be hard for newer businesses to navigate. Payment services are covered by multiple different laws and rules, and providers have been asking for more clarity and consistency," says Reid.

MBIE says the Reserve Bank is leading separate work on payments modernisation, looking at the payments system more broadly, including governance, access, and the infrastructure supporting everyday payments.

"This MBIE discussion document focuses on the front-end services provided by payment service providers to people and businesses, including issues such as protecting customer money, giving clear information to users, service reliability, and responsibility when problems occur."

The consultation is due to close on 3 July.