“We could also see improved cashflow for small-to-medium businesses over weekends and public holidays.”
Wiggins explained the upgrade will affect more than $1.5 trillion of direct credit transactions, direct debits, automatic payments and bill payments made each year.
He suggested people plan for the change by ensuring they’re ready for any automatic payments set up for weekends or public holidays to be processed on their actual due date.
He also suggested checking direct debits – regular bank payments set up and controlled by businesses like utility providers or gyms.
A caveat with the upgrade is that customers of some small banks may still be stuck with business day-only payments.
This is because some smaller banks aren’t directly plugged into the payments system. They don’t have settlements accounts with the Reserve Bank, so have agreements for their transactions to be settled via bigger banks’ connections.
While Wiggins understood the likes of The Co-Operative Bank had an arrangement regarding a bigger bank, the infrastructure of which it uses to ensure payments are processed every day, he suggested customers of smaller banks double-check whether they’ll benefit from the change.
Banks directly plugged into the payments system include ANZ, ASB, Bank of China, BNZ, Citi, HSBC, ICBC, Kiwibank, TSB and Westpac.
The Reserve Bank is reviewing the criteria that gives banks the ability to get a settlement account with it.
Wiggins also noted that “high-value” transactions, which use a different settlement system to the one upgraded, won’t benefit from the change.
These transactions include settlements for property purchases, foreign exchange payments, voluntary payments to some banks’ KiwiSaver schemes and some loan repayments.
He believed upgrading the high-value system was unnecessary at this point.
