Key Facts for New Zealand
- Primary real-time rails: Settlement Before Interchange (SBI), POLi, open banking.
- Typical settlement times: Most payments settle within two hours.
- Common limits: Varies by institution.
What “real-time payments” means in New Zealand
In New Zealand, “real-time payments” refer to transfers that move money almost instantly, 24/7, a stark contrast to the traditional batch processing of the Bulk Electronic Clearing System (BECS). While true second-by-second settlement is not yet universal, open banking solutions from providers like BlinkPay allow for payments that clear within hours instead of days. The scope is expanding from peer-to-peer transfers to include merchant transactions, payroll, and bill payments. There is no formal legal definition; the term is understood in a practical, operational context rather than a statutory one.
The push for real-time infrastructure is co-led by the Reserve Bank of New Zealand and Payments NZ, the industry’s bank-owned governance body. Interbank transfers are managed through the Settlement Before Interchange (SBI) system, which has been upgraded to handle near real-time clearing. While a specific messaging standard has not been mandated for the forthcoming national network, ISO 20022 is the globally accepted format for its ability to carry richer data with transactions (industry norm).
Compared to its peers, New Zealand lags significantly, being the only OECD country as of late 2024 without a fully implemented or committed national real-time payments network.
Payment Rail Overview
Settlement Before Interchange (SBI)
As the foundational backbone for New Zealand's interbank transfers, SBI functions as the clearing house that reconciles funds between financial institutions. While traditionally a batch-based system, it has been upgraded over the years to support near real-time clearing for many transactions. It is the underlying system for most internet banking, direct transfers, and online bill payments in the country.
- Core Interbank Settlement: This system is the primary mechanism through which banks in New Zealand move money among themselves, maintaining liquidity and trust across the financial network.
- Near Real-Time Clearing: Modern upgrades have shifted SBI away from slow, batched processing, allowing it to clear many transfers with much greater speed.
- Wide-Ranging Support: It is the operational foundation for a variety of common payment types, including personal internet banking, recurring bill payments, and direct salary deposits.
Pros and Cons
- Pro: It is a reliable and established backbone for the nation's banking system.
- Pro: Upgrades have progressively increased settlement speeds.
- Con: Settlement is not always instantaneous and can vary depending on the banks involved.
- Con: It functions as backend infrastructure rather than a direct, consumer-facing payment product.
POLi
POLi operates as a secure intermediary that allows consumers to make online payments directly from their bank accounts, avoiding the need for credit or debit cards. When a customer chooses POLi at checkout, it creates a secure connection to their online banking portal to authorize an instant bank transfer. The transaction itself is then cleared in the background through the SBI system.
- Direct Bank Payments: Customers can pay for goods and services online by logging into their bank account, without sharing card numbers with the merchant.
- Secure Intermediary: It acts as a bridge between a merchant’s website and the customer’s bank, facilitating a one-time payment authorization.
- Lower Merchant Costs: Businesses often adopt POLi to sidestep the higher processing fees associated with credit card networks.
Pros and Cons
- Pro: It reduces security risks by not exposing customer card details to merchants.
- Pro: It offers a lower-cost payment alternative for businesses, especially in e-commerce and travel.
- Con: It has less global acceptance compared to major card networks.
- Con: Use of the service has, at times, been flagged by banks as potentially violating their terms and conditions.
Open Banking
Open banking represents a modern framework for payments, using secure Application Programming Interfaces (APIs) to permit regulated third-party providers to initiate payments directly between bank accounts. With customer consent, platforms like BlinkPay connect to a user's bank to execute a transfer, with funds typically settling within two hours. This approach is built on official, bank-approved connections, marking a significant advance in security and speed.
- API-Driven Transfers: Payments are executed through official bank APIs, creating a secure and direct pathway for funds to move between accounts.
- Near Real-Time Settlement: Most transactions are completed within a couple of hours, offering a substantial improvement in cash flow compared to traditional multi-day settlement cycles.
- High Security Standards: The framework operates without screen scraping, meaning customer credentials are only ever exchanged directly with their bank, and providers often hold certifications like ISO/IEC 27001:2022.
Pros and Cons
- Pro: Accelerated settlement times greatly improve business cash flow.
- Pro: Transaction fees are typically much lower than those for card payments.
- Pro: It is built on a foundation of high security and direct bank integration.
- Con: It is dependent on the participation and API quality of individual banks.
- Con: As a newer technology, merchant and consumer adoption is still growing.
Limits, Fees, and SLAs
- Limits: Transaction and daily limits are not standardized across the industry. They are set by individual financial institutions and can vary.
- Fee Structures: Payment service providers often present lower fees compared to traditional card networks. Details contrasting inbound versus outbound fees are not publicly available.
- R2P Fees: A typical fee from a provider like BlinkPay is a percentage-based charge per transaction, such as 0.95% capped at $3.
- Operating Hours: The legacy banking system processes payments in batches, roughly between 9am and 11pm. True real-time networks aim for 24/7 availability.
- Failures & Returns: Real-time payments are generally irreversible once sent. Specific processes for handling failed or rejected transactions are not standardized across the industry.
Compliance and Risk
KYC/KYB & AML
Businesses using instant payments must adhere to Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. This involves active monitoring of user-to-user flows to identify and flag suspicious transaction patterns, similar to the compliance obligations placed on banks.
Data Residency & Privacy
The detailed data carried by real-time transactions heightens the need for robust data protection. Companies must comply with local and international privacy standards and apply strong encryption to protect all sensitive financial and personal information from unauthorized access.
Fraud Controls
Given that real-time payments are typically irreversible, proactive fraud prevention is essential. Businesses must implement real-time detection tools, alerts for unusual activity, and robust customer verification for high-risk transactions to mitigate the risk of immediate and permanent loss.
Recordkeeping & Audits
Businesses are ultimately responsible for their own recordkeeping and reporting obligations. The rich data accompanying instant payments demands secure and accurate documentation, and companies must remain current on all compliance guidelines, even when using third-party payment providers for assistance.
Lightning Network Integration as a Solution
The Lightning Network is a second-layer protocol on Bitcoin that processes transactions off the main blockchain through payment channels. This design allows for instant, low-cost payments. While New Zealand's domestic real-time systems develop, the Lightning Network can function as a complementary global infrastructure. It is particularly effective for international use cases where local RTP systems are not available or efficient, offering a ready-made network for cross-border commerce.
The network provides near-instantaneous settlement, far quicker than the hours some domestic "real-time" systems like BlinkPay require. Transaction costs are fractions of a cent, a stark contrast to the percentage-based fees of local providers. While New Zealand's rails are confined by national borders, the Lightning Network gives immediate access to a global payment system, connecting businesses and individuals to international markets without intermediaries.
- Cross-Border Complexity: It bypasses the slow, expensive intermediary chains of traditional international finance, offering direct, instant payments across borders.
- High Transaction Fees: Its minimal fees make micropayments economically practical for use cases like content monetization, tipping, and gaming, which are often too costly on other networks.
- Settlement Delays: It provides true real-time settlement in seconds, overcoming the delays inherent in batch-based systems or "near real-time" rails that can still take hours to clear.
Integrating this technology offers a direct path to participating in a truly global, real-time economy.
B2B Enterprise Use Cases
- Supplier Payments – Pay suppliers the moment an invoice is approved, confirming payment in seconds instead of days. Business value: Strengthens supply chain relationships and opens opportunities for early payment discounts.
- Merchant Settlement – E-commerce and retail businesses receive customer payments instantly, bypassing multi-day card network delays. Business value: Radically improves daily cash flow and reduces the need for operational credit.
- Treasury Optimization – Corporate finance teams move capital between accounts on demand to consolidate funds or meet obligations. Business value: Offers precise, real-time control over corporate liquidity and investment positions.
- Instant Payroll – Compensate employees, contractors, or gig workers immediately upon completion of work or on a set schedule. Business value: Boosts worker satisfaction and supports modern, flexible compensation arrangements.
- Digital Royalty Payouts – Content platforms pay creators for streams, views, or sales the instant they occur, directly to their accounts. Business value: Attracts top creative talent with immediate and transparent compensation.
Cross-Border Transactions and Remittances to New Zealand
Connecting New Zealand's domestic payment systems to global networks is a significant hurdle. This process of “rail bridging” is complicated by differing technical standards and regulations. Managing foreign exchange (FX) paths introduces further costs and delays, as funds move through multiple intermediary banks. Traditional cross-border systems are notoriously slow and expensive, creating a major barrier to achieving true, instantaneous global payments and undermining the efficiency of local real-time infrastructure.
- Pacific Islands: This corridor is vital for personal remittances, which are a critical source of income for families and represent a large share of the GDP in nations like Tonga and Samoa.
- Australia: A primary corridor for business and trade, facilitating frequent payments between partners and suppliers in cities like Sydney and across the Tasman.
- United States: A key route for technology and e-commerce, where New Zealand businesses pay for global software services or receive payments from American customers.
The Lightning Network offers a direct alternative, bypassing complex intermediary banks and FX conversions. It settles international payments in seconds for fractions of a cent, directly addressing the high costs and delays that characterize traditional cross-border transactions and remittances.
How Lightspark Makes Integration Easy
Lightspark helps fintechs, digital banks, wallets, and exchanges integrate with the Lightning Network without the operational overhead. We manage the complexities of liquidity, node routing, and compliance, providing robust developer tooling to accelerate your time-to-market. Our platform delivers sub-second settlement globally, allowing you to offer your customers instant, low-cost international payments. By abstracting away the backend infrastructure, you can focus on building superior user experiences while connecting to a worldwide payment network. Ready to expand your payment capabilities? Talk to our team.
Sources and Further Reading
- https://www.bnz.co.nz/about-us/news/blinkpay-develops-nzs-first-real-time-payments-capability-using-open-banking-seeks-industry-partners-with-bnz-as-inaugural-participant - BNZ, BlinkPay partner on open banking.
- https://www.blinkpay.co.nz/ - BlinkPay offers open banking payments.
- https://www.consumer.org.nz/articles/new-zealand-left-behind-by-rest-of-the-world-on-payment-technology - New Zealand payment tech lags.
- https://www.lightspark.com/contact - Contact the Lightspark sales team.
- https://www.lightspark.com/news/insights/what-are-lightning-payments - Explains Lightning Network payment protocol.
- https://www.rbnz.govt.nz/hub/news/2021/04/keeping-the-bank-door-open-for-pacific-peoples - Pacific remittance corridor banking access.
- https://stripe.com/resources/more/how-real-time-payments-work-in-new-zealand - How New Zealand payments work.
- https://www.transfi.com/blog/new-zealands-payment-rails-how-they-work---sbi-poli-real-time-payments - Overview of New Zealand's rails.
