Payment Systems

The full spectrum of payments advice

Our payment systems team offers a comprehensive service, consisting of experts across banking and finance, financial services regulation (including anti-money laundering), commercial arrangements, technology, privacy, competition/antitrust, consumer law, economic regulation and law reform.

We understand the practical operations of payment systems and how these fit within the New Zealand regulatory landscape. Our work spans the full spectrum of payments advice, including in relation to payment service and software providers, payment switches and payment gateways, and arrangements for sponsor banks, merchant acquirers and electronic transactions. We are also at the forefront of developments in this area, advising on New Zealand's move towards open banking and the introduction of new payment methods, such as cryptocurrencies and buy-now-pay-later.

Expertise

Payment systems

As with other areas of financial regulation, payment systems are heading for more extensive regulation. The recent passing of the Financial Markets Infrastructure Act 2021 recognises the economy's heavy reliance on certain key financial market infrastructures (FMIs), including payment systems, such as NZ Clear and the Exchange Settlement Account System. This new legislative framework is aimed at regulating FMIs and in particular 'systemically important' FMIs.

Internationally (Australia, UK and the EU), the trend has been towards heavier economic regulation of payment systems, including to promote competition. New Zealand's Retail Payment System Act 2022 establishes a regulatory regime for retail payment networks and their participants. The Visa and Mastercard consumer debit and credit card networks are designated under the Act, and are subject to interchange fees caps, but the Commerce Commission has the ability to designate other retail payment networks with a view to promoting competition and efficiency in the retail payment system for the long-term benefit of merchants and consumers in New Zealand.

Open Banking

Open banking refers to technology (typically APIs) used by banks and financial institutions to share customer data with third party service providers, enabling them to provide a range of different services, from alternative payment mechanisms to enhanced budgeting and accounting software. Open banking has the potential to increase competition in the financial services industry and give customers greater control over their personal data. However, open banking also raises concerns around privacy and cyber-security, which require careful consideration.

The UK, EU and Australia have already taken steps to implement open banking, and the New Zealand Government has been watching closely. The Minister of Commerce and Consumer Affairs has been encouraging the industry to continue its progress towards developing an open banking framework. This led to Payments NZ releasing its API Centre, an industry driven initiative designed to centralise payment API standards in New Zealand and provide a sandbox environment for developers to test their open banking products against those standards. The New Zealand Government confirmed its decision to establish a Consumer Data Right (CDR) framework for New Zealand, with legislation to be introduced by the end of 2022.

Experience

Our payment systems experience includes:

An Australasian bank on the development of open API technology in connection with their open banking program.
Acting for four major retail banks as shareholders in New Zealand's largest payment systems operator, Paymark, in respect of their participation in a mobile wallet initiative and the sale of that business to an EU-based payment systems operator.
Advising a major retail bank on the implications of open banking.
Advising a major retail bank in connection with its jointly developed payment app, the first of its kind in New Zealand.
Advising retail banks on the Retail Payment System Act 2022.
Advising banks in connection with the procurement of e-commerce payment solutions, payment technologies and lending platforms.
Advising a large Australasian bank in connection with the development of various proprietary apps and related service offerings in compliance with New Zealand law
Assisting Northern Trust in respect of the supply of financial middle and back office platform services (including transfer agency, fund accounting and investment operations services) to various pension fund and financial services clients.
Advising a major retail bank on acting as a sponsor bank and the related merchant acquiring arrangements.
Acting for a major retail bank in relation to Commerce Commission investigations into the competition law implications of the structuring of credit card schemes and fees.
Acting for a number of major New Zealand retailers in relation to the implementation of both in-house loyalty schemes, and the establishment of relationships with third party loyalty scheme providers.
Acting for a major payment systems FinTech software provider in relation to contracts and joint ventures with financial institutions.
Advising one of the world's largest multi-national banks on New Zealand's payment systems regulations.
Advising on the development of Zeal Systems as an open banking platform and the joint venture between major retail banks in commercialising this platform.