On the cusp of realising the benefits of Open Banking
Issue 675: 8 January 2025
Open Banking progress in New Zealand
New Zealand’s Commerce Commission have published an update providing its observations on recent industry progress. It also highlights some areas of concern, including the prices that banks are charging for API access and the path for an orderly transition away from suboptimal access methods.
Here’s seven key takeaways from the report:
New Zealand is on the cusp of realising the benefits of open banking. It is estimated that at least 15% of eligible customers at each of the four largest banks have now made an open banking payment using APIs. The report states that this is encouraging and exceeds the levels seen to date in both Australia and the UK.
There are several new open banking products on the near horizon for New Zealand businesses and consumers. Interest in this market is high, with one bank having over 100 third parties interested in access to its APIs. An example of a new product being offered is Payap, which may be the first in-person open banking payment product widely launched. As a low cost, in-person and online payment service for domestic transactions, Payap will provide new competition to Visa and Mastercard.
The banks have developed a Confirmation of Payee system, which is expected to have full availability by April 2025.3 This will support efforts to fight fraud and scams, and could be scaled more widely, such as to payroll services or online marketplaces (such as Trade Me or Facebook Marketplace).
Standardised APIs are coming to market, but access remains constrained: To date, most banks have delivered APIs to the market for the deadlines but have not gone live with third parties until sometime later. The reports considers this approach to be inefficient and is delaying the potential launch of new products and services
Pricing for API access is limiting open banking: We are concerned that current pricing is damaging the nascent market. Taken together, prices are high, vary considerably between banks and are not transparent – this is limiting third parties’ abilities to offer competitive products and services using these APIs. We expect to see banks review and lower their pricing to drive open banking uptake across a range of transaction values, and we expect to see standardised access pricing. We also expect early stage fintechs to have the opportunity to compete on merit and not face higher prices due to their initial small scale, among other things.
The NZ Commerce Commission wants to see a coordinated orderly transition of suboptimal access services to bank APIs where available.
Governance of open banking is undergoing change: The partnering work of the API Centre has been authorised under a set of governance conditions. The commission has set Payments NZ the challenge to improve its governance structure for open banking and to address transparency and perception concerns.
Access the full report: Open Banking progress in New Zealand.
PLS Podcast
Back in October at the final Payment Leaders Summit of 2024, Paul Horlock, Chief Payments Officer at Santander and Mike Chambers discussed some of the hottest topics shaping the payments world:
The future of Account-to-Account (A2A) payments — where are we headed, and what’s driving the shift?
The impact of the PSR's reimbursement policy — how will it reshape customer protection and industry accountability?
How Santander is leading the charge on payments innovation — what’s next on their roadmap?
WhatsApp Pay made available to all Indian users
Tapping into India's Unified Payments Interface, WhatsApp Pay makes it possible for people to send money directly to family, friends, and loved ones from the contacts menu.
The service launched in 2020 but the National Payments Corporation of India mandated a phased rollout, initially limiting it to 40 million users before an increase to 100 million in 2022. Now, the NPCI has removed the limit with immediate effect, meaning that WhatsApp Pay can be used by all of the app's 500 million-strong Indian customer base.
Bacs and cheque transaction volumes
Note: Since publication of this newsletter on the 8 January 2025 Pay.UK have withdrawn the “Payment Statistics December 2024” report from their public website.
In light of this information being withdrawn by Pay.UK the online version of Payments:Unpacked has been updated.
New Zealand reduces merchant service fees for card payments
New Zealand's Commerce Commission has issued a draft decision to reduce fees paid by Kiwi businesses for accepting Visa and Mastercard payments.
We’re proposing a reduction of around $260 million a year to the largest component of the fees charged to New Zealand businesses to receive Visa and Mastercard payments. We’re also setting the clear expectation that payment providers and businesses should pass these savings on to customers.
New Zealand’s Commerce Commission chair, John Small
The Commission says that some businesses, whether due to finding it difficult to understand the fees they are being charged or because they seek to make a margin on their cost of payments, set their surcharges higher than the actual merchant services fees.
We’ve been clear businesses should not be surcharging their customers more than the cost to them of accepting that payment,” says Small. “Excessive surcharging is not easy to spot. Different businesses pay different fees and the Visa and Mastercard fees are themselves quite complex and variable. Simplifying these fees is also part of our focus.
New Zealand’s Commerce Commission chair, John Small
The Commission chair says that the expectation is for a reduction of between 0.7% to one percent on merchant surcharges and will seek to legislate should price changes not filter through to the end-consumer.
Exploiting major platforms to scam consumers
A new report from the Payment Systems Regulator (PSR) shows how fraudsters exploit major platforms to scam consumers.
The PSR’s data shows that in 2023 alone, APP scams cost UK consumers £341 million. Victims report losing trust not only in banks but also in the platforms fraudsters use to contact them - 41% of victims said their trust in social media companies had been shaken, four times as many as those who lost trust in traditional banks.
The PSR has used its powers to gather data from 14 of the largest banking groups in Great Britain and Northern Ireland. The report identifies which platforms fraudsters most commonly exploit across different APP scam types, including romance, purchase, and investment scams for example.
Fraudsters target major platforms to commit scams: Social media, technology platforms, and telecoms are frequently exploited by scammers, resulting in losses of hundreds of millions of pounds for UK consumers.
Over half of scams involve Meta platforms: In 2023, Meta platforms (Facebook, Instagram, WhatsApp) were linked to 54% of scam incidents (119,338 cases) and 18% of total losses (£62.7 million). That’s roughly £1 in every £5 lost in scams.
Telecoms and emails cause significant losses: Fraudulent calls and texts via telecoms were used in 12% of scam cases (26,975) but accounted for 31.5% of the losses (£107.2 million). Emails, while only involved in 2% of scams, led to disproportionately high losses of £35 million (10% of the total).
Romance scams are more common on Meta platforms: Meta platforms were used in more romance scams (31%) than all dating websites combined. Facebook, Instagram, and WhatsApp together accounted for 1,590 incidents and £5.1 million in losses.
Purchase scams dominate on Facebook: The most common scams in 2023 were purchase scams, where victims buy items that never arrive. Facebook was used in 44% of these cases (67,337 incidents), with losses of £19.5 million—more than any other platform. While eBay saw fewer scams (1.6% of cases), the losses per scam were significant, totalling £6.7 million.
Investment scams cause the biggest losses: Investment scams made up 23% of total losses (£80.3 million) but only 6% of scams (12,500 incidents). Fraudsters often used telecoms (£18.4 million in losses), Meta platforms (£11.6 million), and even friends and family connections (£9.6 million) to deceive victims.
Shift4 acquires Card Industry Professionals
Card Industry Professionals – the Grimsby-based card payment solutions provider – has been acquired by Shift4, a US-based company that is a global leader in payments and commerce-enabling technology, listed on the New York Stock Exchange.
Card Industry Professionals provides card terminals, point of sale and online payment solutions to thousands of SMEs such as retailers, hair salons and hospitality venues. The business was founded in 2017 by award-winning young entrepreneur Ciaran Savage, who was joined by his mother, Lyn Savage, as Operations Director, and John Selby as Sales Director, both of whom have many years of experience in the UK payments industry. Mike Chambers served as a NED on the CIP Board and, following the acquisition by Shift4, exited the business.
We are excited to be joining the Shift4 family. We are committed to upholding the company values and best-in-class service customers have come to expect from us and are confident that this acquisition will allow us to improve upon those service levels, while offering even more value in the form of new benefits, incentives and product offerings.
Ciaran Savage, Founder and Managing Director
From Decimalisation to Digital: Exploring the UK’s Rich Payment History.
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