🇳🇿 Payments in New Zealand

The market at a glance

New Zealand’s retail payments market runs almost entirely on cards. In December 2025, cardholders made 195 million transactions worth NZ$11 billion, an average ticket of NZ$58 (Stats NZ, Electronic card transactions, December 2025). Two instruments common elsewhere are missing. Checks disappeared in 2021, and the country has no instant retail credit transfer rail. Cards therefore cover uses that other markets split across several payment methods, which narrows a merchant’s options for accepting payments accordingly.

Five institutions divide the governance and regulation of payments in New Zealand. None holds all the powers, and the split differs from what European practitioners are used to. The central bank operates the interbank settlement infrastructure but plays no role in the cost of acceptance, which has been the competition authority’s remit since the Retail Payment System Act 2022. Responsibilities are divided among interbank settlement, oversight of market infrastructures, retail price regulation, drafting legislation, and clearing rulemaking.

New Zealand banking is concentrated in four institutions. On August 20, 2024, the Commerce Commission published the final report of its market study into personal banking services. It found that the four largest banks do not face strong competition because the market lacks a disruptive player. Those four are ANZ, ASB, BNZ, and Westpac, all subsidiaries of Australian groups. The report made 14 recommendations, and the government accepted all of them. Two have shaped the work done since: strengthening Kiwibank, the state-owned bank, and setting a deadline for fully operational open banking by mid-2026.

EFTPOS: fee-free domestic debit, and its decline

EFTPOS is New Zealand’s domestic point-of-sale debit system. It became widespread in the 1980s, ahead of most comparable systems elsewhere. The card debits the checking account directly, requires a PIN, and carries no interchange fee. The merchant pays a terminal subscription rather than a percentage of the ticket. For 30 years, that fixed cost structure, independent of the amount collected, put New Zealand among the OECD countries where card acceptance was cheapest.

That founding choice had a second consequence, for the country’s payment architecture as a whole. Free, immediately available domestic debit already met the need that instant retail credit transfers serve elsewhere, and New Zealand never built such a rail. Cards therefore fill the everyday payment role that other markets assign to a transfer rail.

The spread of contactless payments shifted the balance between the two rails without anyone making a commercial decision. Worldline NZ data reported by the New Zealand press in 2025 put proprietary EFTPOS below 20% of transactions in December 2024, with a further drop in January 2025. The same sources put scheme contactless at about 53% of electronic payments. American Express told Parliament that Visa and Mastercard held more than 90% of the market (interest.co.nz, 2025). The domestic rail, long dominant at the point of sale, now handles only a minority of transactions.

• Still true in 2026: New Zealand terminals accept EFTPOS by card insertion and PIN, with no percentage-based fee.
• What isn’t true: EFTPOS is not available for e-commerce in this form; online payments go through the card schemes, a wallet, or bank payment initiation.
• What a merchant can do: steering customers to insert rather than tap is still legal, but it hurts the checkout experience and the practice is fading.
• What an integrator must check: the terminal’s application priority setting determines the default rail, and therefore the monthly bill.

Payments NZ, rule frameworks, and settlement before interchange

Payments NZ Limited sets the rules for New Zealand’s clearing systems. It admits participants, publishes the rule frameworks, and resolves interbank disputes, but it operates no processing infrastructure. Processing is owned by the banks and private switches, which run it under those rules. Rulemaking and execution therefore sit with different parties. A processing incident is handled by the operator involved, whether a bank or a switch, while Payments NZ steps in only on any interbank dispute that results.

The SBI mechanism, short for Settlement Before Interchange, settles interbank positions before the transaction files are exchanged. Elsewhere, the usual order is reversed: banks exchange files first and then settle the resulting net balance, leaving counterparty risk open between the two steps. In New Zealand, positions are settled several times a day in central bank money before the files are exchanged. Settlement risk between participants is eliminated by design. No obligation is outstanding when payment information moves between banks.

ESAS (Exchange Settlement Account System) is the real-time gross settlement system run by the RBNZ, which charges for it at cost. At the end of the chain, it settles in central bank money the positions fixed during the SBI cycles. Its access criteria were revised in March 2025 after two public consultations, opening membership to nonbank participants. Domestic payments sent to ESAS migrated from SWIFT MT messages to ISO 20022 in November 2025, at the end of the coexistence period that began on March 20, 2023. Oversight falls under the Financial Market Infrastructures Act 2021, enacted on May 10, 2021, under which the RBNZ and the FMA act as joint regulators. The standards for designated FMIs, issued on July 27, 2023, have been taking effect in stages since March 1, 2024.

Two competing switches under a single rulebook

A payment switch is the technical operator that routes authorization messages between the merchant’s terminal and the card-issuing bank. New Zealand has two domestic switches, while most developed markets have only one. They compete commercially while applying the same CECS rules set by Payments NZ. This unusual setup explains how the country’s terminal market is structured.

This setup has two operational consequences. The first concerns the choice of switch. Most markets offer no such choice, and in New Zealand it is negotiated, to the point that two neighboring merchants can route the same cards along different paths. The second is a matter of public debate. The switch that handles 70% of the country’s in-store transactions is now foreign-owned, an issue raised publicly during parliamentary proceedings in 2025.

Capped interchange: the Retail Payment System Act 2022

The Retail Payment System Act 2022, which received Royal assent on May 13, 2022, sets the framework for regulating retail payment pricing in New Zealand. Its legal design differs from the EU’s. Rather than writing rate caps into the statute, it designates the Mastercard and Visa networks and gives the Commerce Commission the power to issue binding network standards, which the regulator can revise without going back to Parliament. The EU approach writes the rate into a regulation, where it stays fixed until the regulation itself is amended. This difference explains why New Zealand’s caps have been revised so often since 2022.

The initial pricing standard took effect in November 2022, with guidance published on December 15, 2022. It has saved merchants about NZ$160 million a year. Then, on July 17, 2025, the Commission issued its final decision establishing the Mastercard and Visa Interchange Fee Network Standard 2025, which revokes and replaces the first standard.

• A small business’s merchant service fee typically runs between 1.2% and 1.5%, and some pay as much as 2.5% (Commerce Commission, 2025).
• Before the reform, interchange made up 60% of that cost: the rest is scheme fees and acquirer margin, neither of which is capped.
• American Express, UnionPay, and Diners Club are not designated networks: their acceptance costs fall outside the standard.
• Commercial cards remain uncapped; the Commission called their rates excessive but judged its analysis insufficient to set a cap.

Surcharging: regulated, contested, still legal

A surcharge is an extra fee charged to customers based on the payment method they use. Surcharging is still allowed in New Zealand, with conditions. The Retail Payment System Act 2022 empowers the Commerce Commission to issue standards ensuring that a surcharge does not exceed the merchant’s actual cost. The Commission has published guidance to that effect, aimed in particular at surcharges that include a markup.

The rule’s effect has been quantified. The Commission estimates that consumers pay NZ$45 million to NZ$65 million a year in surcharges above merchants’ reasonable payment costs (Commerce Commission, cited by MBIE, 2025). That figure was used to justify a proposal to ban surcharging outright.

• Scope under the bill: any in-store payment by EFTPOS, Visa, or Mastercard, debit or credit, in any form factor (physical card, tokenized card, mobile wallet).
• Out of scope: online payments and non-designated networks (American Express, UnionPay, Diners Club).
• Proposed penalty: a prohibited surcharge becomes unrecoverable, the customer can get it refunded, and the Commerce Commission has enforcement powers.
• Possible extension: the bill includes a regulation-making power to extend the ban later to online commerce or other networks.

Open banking: from voluntary industry scheme to binding law

Open banking means giving authorized third parties access to account data and payment initiation through standardized APIs. With no instant retail rail, API-based payment initiation stands in for immediate payment in New Zealand. The framework started as an industry initiative before being written into law. In 2019, Payments NZ created the API Centre, which publishes API standards and operating rules and accredits third parties.

The legal basis for that access changed in 2025. The Customer and Product Data Act 2025, which received Royal assent on March 29, 2025, creates a right of access to data, New Zealand’s equivalent of a consumer data right. Banking is the first designated sector. The Customer and Product Data (Banking and Other Deposit Taking) Standards 2025, in force since December 1, 2025, set the technical, security, and operational requirements. Designated data covers the customer’s name, contact details, account numbers and types, balances, and statements, including up to two years of transaction history. The designated action is payment initiation.

Accepting payments in New Zealand: what breaks and what it costs

Accepting payments in New Zealand hinges on two features that catch out professionals from Europe, Brazil, or India. Cards are the default rail, whereas those markets have taught them to expect a bank transfer first. Account-to-account payments do exist, as direct debits, automatic payments, and API-initiated payments, but they do not execute in real time. Both the choice of payment method and the design of checkout flows follow directly from these two features.

Confirmation of Payee is a service that checks the name and account number entered by the payer against the payee bank’s records. Retail banks began rolling it out in late November 2024, with full integration into online and mobile banking apps expected by Easter 2025 (New Zealand Banking Association). The check runs when the details are entered, before any funds are sent, and flags a mismatch to the payer before they confirm the payment. It therefore adds a verification step to every outgoing transfer flow.

• What Confirmation of Payee covers: domestic payments initiated from personal online or mobile banking, between New Zealand banks.
• What it doesn’t cover: payments to accounts abroad, existing payees whose details haven’t changed, and businesses with a registered biller reference, such as local councils or network operators.
• Implications for a biller: registering its reference avoids mismatch alerts but removes the check for the customer. The message on the payment page should reflect that.
• Implications for an API third party: a name check is no substitute for strong customer authentication, and it does not replace any anti-fraud obligation.

The road to 2030

Three workstreams are moving in parallel, at different speeds. The first is regulatory, and its deadlines are already largely set. The second, an industry effort led by Payments NZ, is still at the roadmap stage. The third belongs to the central bank, whose indicative timetable foresees no outcome before the end of the decade.

Payments NZ’s Next Generation Payments program is the country’s joint industry planning exercise. It has gone through several phases: identifying modernization workstreams from 2015 to 2019, a plan published in 2020, exploratory work through 2024, and a public consultation launched in September 2024. It produced five strategic recommendations, including a consolidated roadmap, a modular approach to capabilities, and a study of digital identity for payment security. Payments NZ presents them as a starting point for discussion, not a fixed implementation plan. The program sets no launch date for an instant retail rail.

The two trends described in this guide are moving in opposite directions. The cost of acceptance is falling by regulatory decision: the latest round of caps has applied since May 1, 2026, and commercial cards were the subject of a consultation in 2025. Payment immediacy, by contrast, appears on no dated timetable, since the Next Generation Payments program sets no launch date for an instant retail rail. A payment acceptance setup designed today therefore rests on falling prices and unchanged settlement times.