Regulation overdue for NZ payments systems

A UK-based payments systems provider is reportedly in discussions with Reserve Bank of New Zealand officials, aiming to convince the central bank to adopt its real-time systems and replace inter-bank payments with standardised peer-to-peer transactions.

Spruiking his case on the sidelines of the Payments NZ conference in Auckland was Carlos Sanchez, Orwell chief executive and co-founder. He asserted that New Zealand lags behind other comparable nations that have started to regulate their payments systems to cope with the entrance of new players and new ways of providing financial services - including payments.

It would seem that Sanchez was being overly keen, as Reserve Bank deputy governor Grant Spencer, speaking at the same conference, said the Bank is "monitoring developments in digital infrastructure, and intends to engage with industry as the technology develops."

Fort its part, Orwell wants to be the provider of one component of a broader payments network, servicing retail and wholesale transactions. Sanchez said his firm was targeting Europe, North America, Australia and New Zealand, as all of them are "traditional trading partners" in which to gain a foothold for its systems.

According to Sanchez, this aspiration is being delayed by major banks' reluctance to allow greater interaction between payments systems, as that would break up their own integration between cash management functions and credit facilities.

"A model separating cash management from credit makes sense," Sanchez said. "The current integration in banks created a very obvious and permanent conflict of interest."