Payment services regulation: fit for purpose?

The Ministry of Business, Innovation and Employment (MBIE) has opened consultation on whether New Zealand’s regulation of “front-end” payment services is fit for purpose.

MBIE’s discussion document, (released on 22 May 2026) focuses on the payment services that consumers and businesses use, and the providers that offer them (including banks and non-bank providers). MBIE is seeking to understand how the current regulatory settings work in practice, including what is working well, where there are gaps or uncertainty, and what outcomes matter most. The consultation is intended to inform future policy development by drawing on real-world experiences across the payment services ecosystem.

 

THE PAYMENT SERVICES LANDSCAPE

Payment services help consumers and businesses pay and get paid. MBIE identifies two broad types of payment services:

• Payment facilitation services: services that help people make or receive payments without holding money for long periods (or at all). They can help initiate or process a payment, and include:
  • merchant acquiring services that help businesses accept card payments;
  • online payment gateways and business payment platforms;
  • money transfer services (including cross-border transfers);
  • services that enable payments directly from a bank account (including via open banking); and
  • services that enable payments using digital tokens or electronic money.
• Stored value services: services that hold a balance for a customer to use later (for example, a wallet app may hold money or value that can later be used for payments or transfers). The balance may be held in New Zealand dollars or in digital tokens (such as stablecoins). Some stored value products can look similar to a bank account, which can affect user expectations about safety and protections. These services are provided by both banks and non-bank providers, and some providers offer them alongside other activities such as lending or deposit-taking.

Payment service providers may operate at different points in a transaction. A provider may offer a customer-facing service (such as a wallet app or business payments platform) while also participating in payment infrastructure services, such as processing or network arrangements behind the scenes. This consultation is focused on the front-end settings – services offered directly to consumers and businesses.

Many services depend on access to banking services, including transaction accounts, payment processing, and liquidity to fund or settle payments. Services often rely on underlying systems and arrangements, such as account-to-account payments through the banking system, card networks (for example, Visa or Mastercard), open banking standards and accreditation frameworks, or digital token networks (for example, blockchain networks). These arrangements can affect costs, speed, reliability, and the terms on which providers can operate.

New Zealand does not have a single dedicated regulatory framework for payment service providers. Instead, the applicable regulatory requirements depend on the nature of the activities undertaken by the provider, how the payment services are structured, and whether the provider is a bank or a non-bank provider.

 

WHY THE NEED FOR CHANGE?

MBIE identifies several areas where the current settings may not be working well in practice:

1. Rules may be unclear, inconsistent, or poorly matched to payment services

Different rules can apply depending on structure and service type, meaning similar services may be treated differently. Many rules were designed for deposit-taking or investment products and do not align well with payment services, creating uncertainty, cost and complexity.

2. Barriers to entry, growth and competition

Providers can face barriers accessing bank accounts, payment systems, or sponsoring arrangements. If access is constrained or costly, it can limit a provider’s ability to launch, operate or scale, affecting competition.

3. Gaps in consumer and business protections

There is no single provider-level framework for safeguarding customer money, and disclosure and conduct requirements are not consistent. This can make protections unclear and leave users exposed when something goes wrong.

4. Fragmented and limited protections for stored value and digital token services

Protections depend heavily on how services are structured and may be limited or fragmented, particularly for digital token-based services. As a result, similar-looking products can involve different risks and levels of protection.

5. Uncertainty affecting confidence and innovation

Unclear or uneven rules can reduce user confidence and make services harder to compare. This can slow adoption and innovation and may result in fewer new services and less competition over time.

 

MAKING A SUBMISSION

MBIE is seeking feedback from anyone with an interest in payment services, including banks and non-bank payment service providers, businesses that use payment services, business groups, advocacy bodies, legal or operational advisers and academics, and consumers and consumer representative organisations.

Questions in the consultation include:

1. how payment services work in practice for different users (including consumers and small businesses)
2. whether there are gaps in the current rules, or areas where the rules are unclear
3. whether today’s approach strikes the right balance between protecting users and supporting competition and innovation
4. what outcomes New Zealand should prioritise for payment services, and what kinds of options (including options that do not involve new laws) might be available to achieve those outcomes

Consultation feedback will be used to advise Ministers on whether any government action is needed.

Submissions can be made via MBIE’s online submission portal. Consultation is due to close at 17:00 on 3 July 2026.

Contact us if you have any questions or would like assistance preparing a submission.