$1.3 billion a year is sitting in New Zealand’s broken payments system

Reliable, sure, but reliably ancient

The Reserve Bank has finally put a number on New Zealand’s payments problem. In a report released on 18 August, the RBNZ found that modernising the country’s retail payments system could boost the economy by between $700 million and $1.3 billion a year. With around $2 trillion of retail payments flowing between banks each year, even marginal improvements compound into serious money.

The RBNZ’s verdict was blunt. The system remains reliable for many users but is increasingly falling behind global standards, with structural issues also slowing further modernisation. Reliability, it turns out, is not the same as being fit for purpose. It works because it has barely changed.

Banking Reform Coalition convenor Kent Duston put it less diplomatically on the same morning, describing the technology underpinning the system as “scrap metal with blinking lights”. He noted that instant payments already work in more than 120 countries – split a dinner bill and the money lands in the other person’s account before you’ve paid the tip.

Just how far behind

The gap is not marginal. Back in July 2023, interest.co.nz reported that New Zealand and Israel were the only two OECD countries without real-time payment systems. Australia switched on real-time account-to-account payments in February 2018. New Zealand banks only moved to 365-day-a-year payment processing in May 2023 – before that, transfers were processed on working days only. In 2023, then-RBNZ Assistant Governor Karen Silk called real-time payment capability “a prominent example of so-far missed developments that has put New Zealand payments behind on the global stage.”

Three years on, the most advanced local attempt is still crawling. As of May 2026, BNZ’s BlinkPay takes 30 to 60 minutes to move money between banks, and only runs between 9am and midnight. That is the frontier. The underlying bulk payment system still batches transactions and clears them in half-hourly to hourly cycles inside the same limited window.

The bill businesses are footing right now

While the industry moves at what critics call geological speed, the costs are landing on merchants. The Commerce Commission’s June 2026 snapshot found New Zealand businesses pay $1 billion a year to accept Visa and Mastercard payments, and that three in four payments now run over those networks. EFTPOS, which charges a flat monthly fee rather than a slice of every transaction, is fading because it cannot handle online, contactless or device-based payments.

Regulation has clawed some of that back. The Commission’s 2025 interchange decision is projected to cut interchange fees by a further $100 million a year and merchant service fees by another $90 million, taking total projected annual savings to $260 million once earlier caps are included. Even after that, New Zealand’s domestic personal credit card interchange caps remain more than double the equivalent European caps. A modern account-to-account rail would give merchants a genuine alternative to the card duopoly, not just cheaper terms within it.

Why nobody has fixed it

The core problem is governance. Payments NZ, the bank-mandated body running payment facilitation, has no power to compel its members to build real-time rails. Voluntary coordination among the four big Australian-owned banks has predictably delivered the pace of the least motivated participant. Duston told Newsroom in May 2026 that the sector was offering “incremental change, worthwhile change, but incremental change nonetheless,” and that the banks were “fat dumb and lazy.” He has also argued the banks paid out large shareholder dividends rather than reinvesting in the systems.

The Retail Payment System Act, passed in May 2022, handed the Commerce Commission a broad regulatory toolkit, but so far it has been aimed at fees, not infrastructure. That is the crux of the RBNZ’s warning. The market will not deliver real-time payments on its own, and the regulators have the powers to force the issue but have not yet turned them on the plumbing.

What a modern rail would unlock

For businesses, the upside is concrete. Real-time infrastructure means confirmed funds on arrival, richer data that cuts reconciliation work, real-time payroll, faster gig-economy payouts and better fraud detection. Stripe points to e-commerce, retail, hospitality and the gig economy as the sectors crying out for it, precisely where cash-flow timing and transaction costs eat margins. Australia’s New Payments Platform, the UK’s Faster Payments, Brazil’s Pix, India’s UPI and Singapore’s PayNow all show what a functioning system looks like.

The RBNZ has now attached a billion-dollar price tag to inaction. The question is whether the regulators are willing to use the enforcement powers the banks have spent years quietly betting they never would.

Sources

• Modernising retail payments system could boost economy by up to $1.3 billion a year – RNZ (2026-08-18)
• “Scrap metal with blinking lights”: NZ’s ‘ancient’ bank payment system falling behind global standards – Newstalk ZB (2026-08-19)
• Could NZ do real-time payments in a blink, if banks got a move on? – Newsroom (2026-05-15)
• Payments monitoring snapshot: Convenience of Visa and Mastercard sees businesses pay more – Commerce Commission (2026-06-30)
• Retail Payment System: Interchange Fee Regulation – Final Decision and Reasons Paper – Commerce Commission (2025-07-17)
• RBNZ gives banks the hurry-up on NZ’s glacial move towards real-time payments – interest.co.nz (2023-07-27)