The Reserve Bank has put a price on what New Zealand gives up by sticking with an ageing payments system, and it runs into the billions.
In an issues paper released on Tuesday, the bank said modernising the country’s retail payments infrastructure could lift the economy by between $700 million and $1.3 billion a year. Around $2 trillion of retail payments flows between New Zealand banks annually, and at that scale the bank argues that even small gains in efficiency add up to real money across the whole country.
Assistant Governor Karen Silk said payment systems are core economic infrastructure, and that an outdated one holds growth back. “New Zealand’s retail payments system is operationally reliable, but is outdated, and does not meet international best practice for modern, faster retail payment systems. We have fallen behind global standards, with outdated infrastructure, limited modern payment capabilities, and insufficient innovation,” she said.
That is a blunt assessment of a system most New Zealanders would say works perfectly well. Eftpos, debit cards, credit cards and bank transfers move money around the country every day without much drama. The bank does not dispute the reliability. Its argument is about what the system cannot do.
The paper identifies a set of capabilities that are now standard in comparable countries but missing here. Instant payments, where money lands in the other account in seconds rather than overnight or on the next business day, are the most obvious. Request to pay, where a business or a person sends a payment request that the payer approves in their banking app, is another. So are QR code payments, which have become routine in much of Asia and Europe. According to RNZ’s report on the paper, the bank also says a modern system would offer better protection against scams and fraud.
Behind those gaps sit deeper structural problems. The paper points to a reliance on legacy platforms that restricts competition and innovation, meaning new entrants struggle to build anything genuinely different on top of infrastructure that was not designed for it. It also flags the absence of a domestic payment system as a risk to economic resilience, since so much of what happens at the checkout depends on networks run offshore.
That risk stopped being theoretical only last weekend, when a Mastercard outage declined payments across New Zealand after a routine system update, leaving shoppers at the counter with cards that would not work. The country has also been steadily losing its fallback option, with bank ATM numbers down 32 percent in a decade while the Reserve Bank weighs a minimum standard for cash access.
Perhaps the most pointed finding is that nobody is actually in charge. The bank says there is no entity with a strategic mandate to provide system-wide leadership across retail payments. That helps explain why progress has been slow. Payments infrastructure is expensive to replace, the costs fall on the banks, and the benefits are spread across consumers, businesses and the wider economy. When no one body owns the outcome, the sensible commercial decision for each player is to wait.
Government has been circling this problem for a while. A parliamentary select committee banking inquiry recommended pushing for real-time payments, and the government endorsed that, calling on banks to invest in next-generation payment infrastructure. Finance Minister Nicola Willis then backed the Reserve Bank to lead the development of a payments modernisation strategy, and the bank confirmed in Tuesday’s release that the work has the Minister of Finance’s endorsement.
The bank has set up two workstreams. The first looks at the technical requirements needed to modernise the infrastructure and will feed into future options. The second deals with strategic leadership, regulatory coordination and system governance, which is the part aimed squarely at the leadership vacuum the paper describes.
The strategic question underneath all of it is whether to keep patching or start again. The paper frames it as a choice between continuing with incremental reform or undertaking structural modernisation of the underlying infrastructure to build long-term capability and resilience. Those are very different bills, and very different timeframes.
Silk was clear the bank cannot deliver this on its own. “We cannot do this alone and, in partnership with other government agencies, are committed to working closely with businesses, the payments industry and other interested stakeholders to shape the future direction for New Zealand’s payments system and meet broader public interest objectives,” she said.
The consultation is open for 10 weeks, with submissions closing on 27 October 2026. After that the bank will analyse the feedback and give ministers advice on options for reform, work Silk expects to be completed in the first half of next year. A proposed roadmap and business case will be developed alongside the options paper, and any policy options will go out for a second round of public consultation with a cost benefit analysis attached.
The paper had been signalled a few days in advance. Speaking at the Financial Services Council conference in Auckland, Assistant Governor of Financial Stability Angus McGregor told the audience the bank would publish an issues paper “that makes the case for changes to New Zealand’s payments system, and we will be seeking feedback on the key issues we have identified”. He said the work was not just about payments infrastructure but about the financial system the country will need in the years ahead.
Meanwhile the volume of card spending keeps climbing. Stats NZ figures for the July 2026 month show retail card spending rose 1.3 percent, or $90 million, on June, with core retail spending up 2.2 percent or $136 million. Every one of those transactions runs across the infrastructure the Reserve Bank has just described as falling behind.
For consumers the practical test will be simple enough. It is whether money sent on a Friday night arrives on a Friday night, whether a small business can get paid without waiting a day for funds to clear, and whether a scam payment can be stopped before it leaves the country.
Have you been caught out waiting for a payment to clear, or left stranded when the card network went down? Tell us what a faster payments system would mean for you in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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