New Zealand consumers spent nearly $45 billion NZD in 2023 – an all-time high, according to Trading Economics data. There’s a lot of potential for businesses considering expanding into the country. But like any new market, starting operations in New Zealand comes with its own set of challenges, from regulatory hurdles to the unique payment preferences of local customers.

Below, we’ll outline how foreign businesses considering expansion into New Zealand can think about key factors in the New Zealand market:

• Recognising the local regulatory environment
  
• Blending traditional and modern payment methods
  
• Tailoring initiatives to New Zealand customers
  

The state of the market

A dynamic mix of payment methods shape the payment sector in New Zealand, and these methods continue to change as new technologies emerge. Although newer electronic payment methods such as mobile payments are gaining traction, credit and debit cards are still the primary way Kiwis make payments. New Zealand’s official currency is the New Zealand dollar, often shortened to NZD or an NZ$ symbol.

New Zealand’s position in the Asia-Pacific (APAC) region allows for constant trade with other APAC countries such as Australia and China, so businesses that operate in New Zealand need to consider cross-border payments and currency conversions. The country’s regulatory framework and industry guidelines set strict requirements for consumer privacy and payment protocols that businesses must also consider.

The nation’s central bank is the Reserve Bank of New Zealand (RBNZ), which maintains monetary stability, regulates and supervises the financial system, and issues New Zealand’s currency. RBNZ collaborates closely with the Financial Markets Authority (FMA) – established in 2011 to oversee the conduct of financial services firms in New Zealand – and the Commerce Commission, which monitors the retail payment system.

Payment methods

New Zealand offers a diverse set of payment options, but there are clear trends shaping the market.

Current usage

Consumers broadly use credit cards across New Zealand, from bustling cities to rural townships. According to a 2022 survey, 77% of Kiwis preferred using debit or credit cards for their daily expenses, although those preferences seem to be changing.

In recent years, contactless payments have increased in popularity in New Zealand, further solidified during the COVID-19 pandemic, when consumers chose payment methods that minimised physical contact. In 2022, 84% of people in the country used contactless payment methods, although only around half used it consistently.

Mobile payments have sharply increased in popularity among New Zealanders, especially younger people who are digital natives. Data from the 2022 survey indicates that 10% of Kiwis prefer mobile payments for everyday transactions, though that figure jumps to 20% for people 34 and under. This data demonstrates an underlying shift in payment preferences, bolstered by consumer trust in mobile transaction security.

While newer payment forms are gradually entering the mainstream, traditional methods such as bank transfers remain well-established. Kiwi consumers favour platforms such as POLi, an online banking e-payment method local to New Zealand and Australia.

Popular B2C payment methods in New Zealand

• Credit and debit cards
  
• Digital wallets (e.g. Apple Pay and Google Pay)
  
• Bank transfers (e.g. POLi)
  
• Buy now, pay later (BNPL) payments (e.g. Zip and Afterpay)
  

Popular B2B payment methods in New Zealand

• Credit cards
  
• Bank transfers
  
• Direct debits
  

Emerging trends

New Zealand is known for its progressive financial systems, and digital assets have started gaining traction. However, cryptocurrency use is far from ubiquitous: according to Finder’s Cryptocurrency Adoption Index, about 7% of New Zealanders owned cryptocurrencies in 2022. Still, local cryptocurrency exchanges such as Easy Crypto and global platforms such as Coinbase have increased interest in digital currencies and allowed Kiwis to participate in the digital economy.

Ease and friction of entry

Accepting payments in New Zealand requires well-rounded strategies for a range of business operations, from collecting tax to payment security measures. Here are a few factors to keep in mind:

Taxes

New Zealand’s goods and services tax (GST) applies to both consumers and businesses. The standard GST rate is 15%. GST is applied to most goods and services, and consumers pay this tax directly when making a purchase. Businesses collect and later submit this tax to the government. Mismanagement of GST – such as late payments or errors in calculation – can lead to penalties, so businesses need to be aware of GST’s implications.

Chargebacks and disputes

The Consumer Guarantees Act 1993 (CGA) is central to New Zealand’s approach to chargebacks. This act says customers have a guarantee that goods and services fit their description, are of acceptable quality, and serve their intended purpose. When consumers believe the goods or services they received do not meet the standards outlined by the CGA, they can initiate a chargeback with their credit card issuer or bank.

Consumers have up to 120 days from the date of the transaction to file a chargeback. Typically, businesses have a shorter window in which to respond, including gathering and submitting evidence to contest the claim.

International payments

E-commerce sales are on the rise worldwide, including cross-border shopping. As customers increasingly purchase from international websites, there’s a growing need for multi-currency payment gateways and solutions that support global transactions. Here are important aspects of accepting international payments in New Zealand to consider:

• Closer Economic Relations (CER)
  Australia is New Zealand’s top trading partner. The two nations share a relationship deeply rooted in the Closer Economic Relations (CER) trade agreement that promotes a seamless exchange of goods, services, and investments. This partnership lowers business costs for companies operating in both countries and makes it easier to accept cross-border, business-to-business (B2B) payments.

• Currency conversion
  For businesses that support international customers, it’s standard to have multi-currency functionality. Conversion rates are determined during transactions, with typical fees between 1% to 3%. The foundational metric in currency conversion is the interbank rate – the rate at which banks exchange money with each other – though it’s common for banks and exchange services to add a markup to the interbank rate when presenting their own conversion rates. Businesses can choose to absorb this cost or pass it on to the customer. New Zealand’s financial environment benefits from the presence of several banks and third-party platforms that simplify currency conversion, including ASB Bank foreign exchange, XE, OFX, and ANZ.

• Platforms from emerging markets
  Because of New Zealand’s proximity to Asia, businesses should consider how to support international tourists with different payment preferences. It can be helpful to accept popular Chinese payment methods such as Alipay to make the checkout process as easy as possible.

Security and privacy

In New Zealand’s payment environment, security, compliance, and regulatory measures are continually adapting to address new challenges and opportunities. Relevant regulations include:

• Data protection laws
  The Privacy Act 2020 is a pivotal piece of legislation that dictates how organisations collect, use, and disclose personal information. It emphasises transparency, with key provisions including mandatory reporting of data breaches, setting international data flow guidelines, and penalties for non-compliance.

• Anti-Money Laundering regulations
  New Zealand’s Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009 requires financial institutions to implement measures aimed at preventing money laundering and terrorism financing. This includes conducting customer due diligence, monitoring transactions, and reporting any suspicious activities to the Financial Intelligence Unit (FIU) of New Zealand Police.

• Electronic transactions laws
  The Electronic Transactions Act 2002 recognises the validity of electronic contracts, electronic signatures, and other electronic communications. This has helped promote the growth of e-commerce and digital payment channels in New Zealand.

• Consumer protections
  Clear guidelines for financial service providers – concerning the provision of information, fees transparency, and dispute resolution mechanisms – help protect consumers. The Financial Markets Authority (FMA) is in charge of ensuring that financial markets are fair, efficient, and transparent.

• Financial service registration
  Entities operating in the financial sector must register with the Financial Service Providers Register (FSPR) to ensure their services are trustworthy and compliant. This registration is a form of quality assurance that fosters trust with consumers and businesses.

Key success factors

Although New Zealand is at the forefront of many payment innovations, the country grapples with challenges from technology adoption to regulatory nuances. Businesses need to address these issues to maintain a resilient and successful business operation in New Zealand. Here’s how to take a multi-faceted approach to accepting payments in New Zealand:

• Diverse payment options
  The total value of digital payments in New Zealand continues to increase each year and is expected to reach $23.3 billion USD by 2028. However, adoption is less likely among older populations and people in rural areas. Businesses should offer multiple payment methods to support different preferences.

• Localised initiatives
  Customising promotions or payment offers to align them with regional events and acknowledge the rich Māori culture can foster a sense of inclusivity and improve customers’ perception of the business. KiwiSaver, New Zealand’s voluntary savings initiative, plays a significant role in the finances of many New Zealanders. Businesses that handle larger transactions, such as purchases of property or luxury items, can integrate payment solutions that accommodate KiwiSaver withdrawals or related financial products.

• Intuitive multi-currency system
  Given New Zealand’s appeal as a tourist destination, accommodating the currencies of top visitor nations such as Australia and China can improve the payment experience for international customers.

• Strict regulatory compliance
  Staying aware of New Zealand’s specific financial regulations, such as the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, is key. Businesses that adhere to these regulations demonstrate a commitment to lawful operations and could boost customer trust.

• Elevated security practices
  Customers value payment security. Businesses that implement top-tier security protocols, such as two-factor and 3D Secure authentication, provide customers with added assurance.

Key takeaways

Improving customer payment experiences through a versatile strategy will help businesses operating in New Zealand thrive. Adhering to the country’s regulatory frameworks, accommodating different payment preferences, and tailoring strategic decisions to local customers are also important aspects to consider when expanding into New Zealand. Here are tips to help your strategic vision flourish in New Zealand:

Recognize the local regulatory environment

• Understand local electronic transaction laws
  Review the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and the Electronic Transactions Act 2002 to ensure your business adheres to applicable regulations.

• Follow consumer protection guidelines
  Read the Consumer Guarantees Act 1993 (CGA) to ensure your products or services measure up, which can reduce chargebacks and disputes.

• Guard customer data
  Comply with regulations outlined in the Privacy Act 2020, as well as with Payment Card Industry Data Security Standard (PCI DSS) requirements to protect cardholder information and prevent fraudulent transactions.

Blend traditional and modern payment methods

• Plan for digital payment disparities
  Digital payments are on the rise, but they’re not yet universal. Accept cash for in-person purchases to avoid alienating customers who haven’t adopted digital methods. Offer a mix of digital payment options, including credit and debit cards and digital wallets, to accommodate a range of customers both in person and online.

• Address customer security concerns upfront
  Although New Zealand has a forward-thinking attitude towards technology, 27% of people cite safety and security as a top priority when considering a new payment method. Be transparent about your business’s security protocols for different types of payments.

• Work around infrastructure limitations
  Open banking presents a world of possibilities, though its growth in New Zealand faces hurdles: 76% of people say they’re unfamiliar with the concept. However, the nation’s four largest banks plan to implement open banking in 2024. For B2B payments in particular, provide customers with additional information about open banking and offer alternative payment methods.

Tailor initiatives to New Zealand customers

• Adopt domestic payment platforms
  POLi, an online banking e-payment method local to New Zealand and Australia, is a popular platform with locals. Integrate POLi as a payment gateway to show local consumers that your business is attuned to their needs.

• Be conscious of Māori cultural considerations
  Recognise the Māori culture and heritage by, for instance, incorporating Te Reo Māori language options or visual elements in the payment interface. Additions like this can significantly help you build customer loyalty.

• Create regional offers
  New Zealand hosts regional events such as the New Zealand Sevens rugby tournament and the Hawke’s Bay Food and Wine Classic. Creating promotions or payment offers aligned with these events can boost transaction rates.