The Ministry of Business, Innovation and Employment (MBIE) has released a discussion document seeking feedback on the regulation of payment services in New Zealand. The consultation asks whether New Zealand's rules for "front-end" payment services are clear, fit for purpose and capable of supporting innovation, competition and consumer confidence in an evolving payments landscape.
Critically, New Zealand does not currently have a single, dedicated regulatory framework for payment service providers. Instead, different rules apply depending on the type of provider, the service's structure and whether the provider is a bank or non-bank entity. This patchwork can make it difficult for both providers and users to understand which rules apply, what protections exist and whether similar services are being treated consistently. By contrast, a cohesive regulatory framework can facilitate trust and confidence, and even investment in new services.
This insight highlights the type of feedback that the discussion document is seeking as well as potential outcomes of the review.
Which "payment services" are in focus?
Payment services in focus are payment facilitation services (e.g. merchant acquiring services, online payment gateways, business payment platforms, money transfer services, open banking-facilitated account-to-account payments via apps or online interface, digital tokens or e-money services) and stored value services (e.g. digital wallets holding money or digital tokens, such as stablecoins). These services can be delivered by both bank and non-bank providers.
The discussion document is not seeking feedback on the bank-end systems and infrastructure that move money between financial institutions "behind the scenes".
Are there gaps in consumer and business protections?
The discussion document suggests there are several areas where current protections may fall short, making it unclear who carries the risk when something goes wrong. This creates risks for users but also impacts trust and confidence and therefore uptake and investment in new services. These areas include:
- the absence of general safeguarding or "client money" rules for customer funds held by non-bank providers;
- no requirement for providers to give users clear and consistent information about key features and risks; and
- no single set of conduct expectations applying across the payment services sector.
Are there barriers to competition and innovation under the existing regulatory settings?
Some providers report that the commercial arrangements they depend upon, such as access to bank accounts and payment networks, can create barriers to entry or expansion. The discussion document asks whether clearer baseline rules could make it easier for providers to demonstrate credibility to partners and investors, reduce duplication and improve transparency, referencing Singapore's Payment Services Act 2019 as an example of a dedicated framework for specified payment services, such as cross-border money transfers, e-money issuance and digital payment token services.
Are bespoke or updated rules required to promote investment in and protect consumers using digital tokens and stablecoins?
The discussion document devotes particular attention to payment services using digital tokens, including stablecoins, noting that the current rules for these services may be limited, fragmented or difficult to compare in practice. While AML/CFT rules and the new Crypto-Asset Reporting Framework (CARF) apply to some providers, they do not create a broader consumer protection or conduct framework. MBIE is seeking views on whether general rules for all payment services would be sufficient, or whether token-based models require more specific regulatory expectations.
Would trans-Tasman alignment better promote cross-border services investment?
Given that many payment services providers operate across jurisdictions, particularly across the Tasman, MBIE is exploring whether closer alignment with Australia could reduce unnecessary compliance friction and support cross-border services and investment. Australia is itself modernising its payment services framework, including the introduction of licensing obligations and safeguarding requirements for certain providers.
What could change?
The discussion document does not put forward a preferred regulatory model. Instead, it canvasses a range of possible approaches, from maintaining the status quo through to introducing a comprehensive licensing and oversight regime. The options under consideration include:
- making existing rules clearer through guidance and targeted legislative changes;
- setting baseline rules through legislation for all payment service activities (such as safeguarding, disclosure and accountability);
- introducing licensing and oversight with tiered thresholds based on risk and size; and
- combining baseline activity-based rules with additional licensing requirements for higher-risk services.
MBIE has indicated it will use the feedback to advise Ministers on whether further regulatory action is warranted and, if so, what form it should take. If Ministers decide to proceed, further consultation on detailed proposals is expected.
How does this consultation fit with other payment regulation?
The discussion document observes that New Zealand lacks a coherent regulatory framework for front-end payment services. Yes, a coherent dedicated regulatory regime for payment services would support a trusted and efficient payment system – yet there is also a risk that the regulatory landscape for payment services in New Zealand becomes even more fragmented.
As the discussion document recognises, MBIE's workstream sits alongside other multiple regulatory programmes, such as the RBNZ's broader payments modernisation programme, the FMA's tokenisation consultation and potential prudential regulation for those payment businesses which become large enough to raise prudential concerns. This is on top of the Customer and Product Data Act 2025, which is already standing up “open banking” via sector designations and standards; the Commerce Commission’s Retail Payment System Act regime for designated card and interbank networks; the joint FMA/RBNZ oversight of systemically important financial market infrastructures under the FMI Act.
A system-wide approach is therefore likely to be important in achieving a cohesive and effective regulatory framework. MBIE indicates it will coordinate with other relevant regulators, including the RBNZ and the FMA, but is unclear how this will be done in a manner that will result in a cohesive, integrated regulatory framework that best serves New Zealand and users and participants within the broader payment system ecosystem. In particular, the paper does not go into any detail as to how MBIE's payment services consultation is intended to interact with the Commerce Commission's work programme, noting the Commission has a statutory powers and functions under the Retail Payment System Act to promote competition and efficiency in the retail payment system for the long-term benefit of merchants and consumers in New Zealand.
How to have your say
MBIE welcomes submissions from a wide range of stakeholders, including consumers, small and large businesses, banks, non-bank payment service providers, industry bodies, academics, advisers, advocacy groups and community organisations until 5pm on Friday 3 July 2026. Submissions can be made via the online form at www.mbie.govt.nz/payment-services-regulation or by email to [email protected].
Additionally, MBIE will be hosting a webinar to provide an overview of the discussion document, with an opportunity for stakeholders to ask questions. Further details, including timing and registration are yet to be published on MBIE's website.
Please reach out to your Russell McVeagh contact or one of our experts to discuss the issues raised in the discussion document or for assistance with preparing your submission.