The Commerce Commission has written an Open Letter to the participants of New Zealand's retail payment system outlining its expectations from the industry to create a more competitive environment that can provide new payment options to Kiwis.
According to Commission Chair Dr John Small, there has been a lack of innovation in payments between bank accounts, one of the most affordable payment methods available to consumers in New Zealand.
Dr Small believes that more efficient payments between bank accounts can significantly reduce the reliance on expensive payment methods like Visa, Mastercard, and American Express.
Bank transfers have existed for a long time, and many consumers already use this method to pay bills. However, the Commission wants this system to be able to develop better ways to pay online and in person.
He also suggests using QR codes and mobile applications to facilitate new in-person payments, which has been successful in other countries. This approach aligns with the Government's development of a Consumer Data Rights (CDR) regime.
The Commission has discovered that a regulatory backstop can create an environment for new entrants to innovate in the payments space. Freeing up payments between bank accounts is crucial to enable this, particularly for smaller businesses that face higher fees for accepting card-based payments.
While the industry has made some progress in the payments space, the Commission is concerned about the length of time it's taking to realise these changes for the benefit of Kiwi consumers and businesses. The Commission believes that banks need to accelerate innovation, and a regulatory backstop would encourage them to do so.
The Commission will begin formal consultation next month to consider recommending to the Minister to exercise powers that would enable the necessary innovation to happen promptly.
