Commerce Commission urges payment system overhaul in NZ

The commission advocates for innovative, efficient payment methods

Commerce Commission urges payment system overhaul in NZ

The Commerce Commission has issued an open letter demanding industry action to foster a more competitive environment, aiming to introduce new, efficient payment methods for Kiwis.

Commission Chair John Small (pictured above) critiqued the current stagnation in bank account payment innovations.

“More efficient payments between bank accounts will reduce both merchant and consumer reliance on the likes of Visa, Mastercard, and American Express and the costs associated with these types of payment methods,” Small said.

Exploring modern payment solutions

The Commerce Commission advocated for the adoption of modern payment technologies, such as QR codes and mobile applications, to facilitate in-person and online transactions. This approach aligns with the government’s Consumer Data Right (CDR) regime development, promising a seamless integration of new payment methods.

Highlighting the importance of regulatory backing, Small argued that such support is crucial for enabling new market entrants to innovate.

“For smaller businesses who are subject to higher fees to accept card-based payments this is particularly appealing,” he said. “It means they could enjoy lower payment costs and reduce – or even remove – the need to surcharge to recoup fees – a win-win for both them and their customers.”

Industry’s slow progress and the call for action

Acknowledging some progress in payment innovations, the Commerce Commission expressed concerns over the slow pace of development.

“Banks need to pick up the pace and we think a regulatory backstop would encourage them,” Small said.

The Commerce Commission plans to initiate formal consultations next month to determine the necessity of recommending regulatory interventions to the minister, aimed at ensuring timely innovation in the retail payment system.


The Commerce Commission's initiative stems from its July 2023 exploration into removing barriers to innovative payment options, including API-enabled payments.

The upcoming formal consultation and the review of Payments NZ's application for an open banking framework underscore the Commerce Commission’s commitment to enhancing competition and efficiency within New Zealand’s payment ecosystem.

The outcomes of these processes could significantly influence the future of payments in New Zealand, with a draft report on competition in personal banking services set for release in March.

Read the Commerce Commission media release here.

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