Bank payments systems set for overhaul

Settlements to be made five times daily under new rules

Banks in New Zealand are having to make changes to the operation of their retail payments systems, because of a new Reserve Bank requirement to settle retail transactions five times a day -- as opposed to the once-a-day settlement that currently occurs.

The requirements for increased settlement frequency are expected to go live between August and October.

"The impetus for this change predates the global financial crisis and was borne out of a desire to ensure the Reserve Bank is better placed to manage any distress or disruption," an RB spokesman says.

"From an IT perspective, system alterations to accommodate the changes are required by all system participants, including the Reserve Bank.

"The extent of these system changes differs between the participants, depending upon the configuration of their existing systems.

"The Reserve Bank's programme of system changes, in order to meet its commitments to the industry, is on schedule."

The spokesman says that settling retail transactions five times a day, rather than just once, will limit the volume and value of transactions "in the pipeline", reducing risk and dampening the overall impact of any disruption.

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