New Zealand the graveyard of payment technology
This month, the Aussies are off-loading their POLi payment system on to New Zealand.
Come September 30, POLi will be slung across the Tasman like a discarded toy. It’s dead technology to the Aussies and they’ve moved on.
When buying tickets on Air New Zealand, Jetstar or Emirates, you’ll discover why POLi exists. Holidays are a big-ticket item, with fat fees for our banks selling big branded credit and debit cards.
What do Kiwis do? We wring our hands, look furtively left and right and go for it with POLi (I’ve done it). There’s money to be saved. NZTA offers it and so do big retailers such as Bunnings, Spark, Intercity and Bluebridge Ferries.
The hand-wringing comes from that creepy feeling of entering your customer number and banking password into a third-party payment system in 2023, with all that education about hackers, fraud and scams.
POLi cracks open your bank account, allowing payment without Visa and Mastercard’s sticky fingers in the pie.
While that might fill you with momentary euphoria, POLi has no consumer protection and is not regulated by the Reserve Bank or the Financial Markets Authority. It has risks. Our banks tell us we are in breach of their terms and conditions inputting our password into a system they can’t audit.
Our antiquated banking system
I’m afraid we’ve become the graveyard for washed up technology. POLi shouldn’t exist in New Zealand either. It does, because our banks have failed to move us on to what’s known as the “FASTT payment system”.
Fast payments also deliver the fraud-busting technology that allows account names to be matched with account numbers. No one can trick us into paying the wrong account.
Fast payments carry a lot more data than our current granny “BECS” and grandad “CECS” (bulk e-clearing and consumer e-clearing). This hobbling pair can’t remember anyone’s name and are a fraudster’s delight.
With a new platform, banks can slot in name-check security and move us to open-banking, where our data can only be shared in a very secure bubble called an API (application processing interface).
How has POLi survived?
POLi is a relic. One of the last bastions of screen-scraping technology. It cracks open your bank account and lets you avoid credit card surcharges.
While I see the point to it (it’s cheap) I’m getting more and more nervous, because it’s not in a new safe bubble.
POLi is not supported by our banks. And that’s where I start getting cranky. Banks allow their logos on POLi’s website. They also don’t stop the system scraping off your data. Banks know when you are using POLi and it’s perfectly possible to block it. It’s also possible to display a warning.
They do neither. It makes them pretty complicit in its use, don’t you think?
New Zealanders have a level of acceptance of screen-scraping you won’t find in another country in 2023. Both the European Commission and the Financial Conduct Authority in the UK won’t allow it with regard to making payments.
The safe bubble of APIs is now considered the only way forward.
It forced POLi’s general manager to announce that due to the increased sophistication of fraud and scams, banks had adopted new software that was incompatible with POLi. She went on to explain three major Australian banks had pulled the carpet out and the business was no longer financially viable.
The owners of POLi, Australia Post (the government), were forced to shut it down. But not before slinging the remaining bones at New Zealand and saying the Kiwis were happy to keep it.
All options are irresponsible
It’s now a bit awkward. If those same Australian banks pull POLi in New Zealand, we’ll be left to make online purchases using only the banks’ Visa and Mastercards. That’ll look like a stitch-up.
When we get the fast payment system (which has instant settlement needed by retailers), it opens the way for whizzy new account-to-account options that compete with credit cards and operate in a safe bubble.
Banks delaying the fast payment system in New Zealand means they keep all those high credit card fees and lump us with the liability of POLi as the free option. It’s irresponsible either way.
If you’re wondering when we’ll get fast payments – here’s a surprise. We’ve already got it. It’s the secret grandchild of Grandma BECs and Grandad CECs. New Zealand’s third payment system is for high value users; banks, wholesale customers, the stock exchange and cross border payments. The one thing consumers are desperate for, has been rolled out to those who will pay a chunky fee for it.
Australia spent $1.2 billion on its new payments system. International experts tell me they think ours will be at least $250 million with tens of millions at each bank to adjust their legacy systems. Should we view this as expensive? In my view it’s quid pro quo for the social license they’ve had to earn more profit in New Zealand.
POLi has never failed, but it must change
On a final note, POLi has never had a security breach. But the world’s hackers are getting more desperate and sophisticated. Other countries are closing up fraud holes and we aren’t. They have name checks on accounts, their banks generate one-time-use credit cards, they confirm purchases in-app (not with codes that get phished) and their apps light up when you’re on the phone, so you know it’s really your bank.
We are sitting ducks and being circled. Hackers, scammers and fraudsters are looking for opportunities to rob our outdated payments system.
That’s why POLi must reinvent itself in a safe bubble API and banks must deliver the fast payment system with open banking.
Janine Starks is the author of www.moneytips.nz and can be contacted at moneytips.nz@gmail.com. Readers should always seek specific independent financial advice appropriate to their own circumstances.