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As the gradual transition towards open banking gathers pace around the world, New Zealand is the latest market to take significant steps forward with pilots of application programming interfaces (APIs).
The country will test two API standards: account information and payment initiation.
Under the account information system, development partners will be given the ability to make pre-payment checks, such as confirming account details and verifying there are sufficient funds available before making a transaction.
The payment initiation API will open up new opportunities for competition by enabling third-party service providers to set up and complete electronic card payments, through direct and secure connections with bank systems.
During the past four months, an industry working group has been involved in the development of the API standards and planning the pilot. The tests will be conducted by a subset of this group comprising six partners: ASB, BNZ, Datacom, Paymark, Trade Me and Westpac.
Insights from these initial experiments will be used to further refine the API standards and improve the design of the framework.
In a statement providing details of its project, Payments NZ revealed that the pilot system is based on the UK’s open banking APIs, with modifications to reflect New Zealand’s local market conditions.
Steve Wiggins, chief executive of the industry body, said: “Over the past 18 months, as this work has taken shape, my team and I have met with a wide range of industry and ecosystem stakeholders, from fintech startups to large tech organizations and government departments.
“All are excited by the prospect of standardizing common payment-related APIs. This is because they can both enable new, cutting-edge digital innovations to come to market, and ease existing consumer and business user experiences and pain points.”
Creating a shared API framework is one of six strategic priorities currently being investigated by the industry in New Zealand, along with 365-day service availability, proxy identifiers, speeding up payments, request to pay, and the ISO 20022 payments messaging format.
Image: Sriphongngam via iStock