In these days of electronic banking, your account number is yet another set of digits you may have committed to memory. They are not as simple to remember as a phone or pin number – recalling around 15 digits in sequence is about as easy as memorising New Zealand’s longest place name, although someone I met over pre-Christmas drinks had that as a party trick.
Those numbers are unique to your account, but the first few digits also identify your bank – for example, 01 for ANZ and 12 for ASB. So if you bank with a building society or credit union, you might wonder why the first two digits of your account number are the same as those for one of the big trading banks.
The reason is those non-trading banks – known as agency banks – don’t undertake direct settlement and interchange with other banks. They pay one of the registered banks to be their agent and use the same prefix so customer transactions go to the correct agent bank. An agency bank has its own branch number(s) at the trading bank and security protocols, so staff can’t see or access agency information.
New Zealand has 21 registered or settlement banks – ANZ, ASB, Westpac, BNZ, TSB, Kiwibank, Cooperative Bank, Southland Building Society and others such as Rabobank and Citibank. All the rules for transactions are overseen by Payments NZ, set up a couple of years ago as an offshoot of the Bankers Association to manage such things as the inter-bank payments system, Eftpos and mobile payments.
But the number of businesses able to do direct settlements looks set to expand over the next year or two. Payments NZ chief executive Steve Nichols says the organisation is looking to open up the rules about who can deal directly with banks.
His organisation will be making presentations to the various agency banks in the New Year on what would be involved in taking the next step up. And the invitation is going wider than those traditionally thought of as banks.
Those interested might also include major supermarket owners Foodstuffs and Progressive Enterprises. They won’t necessarily start offering mortgages, but they would become part of the inter-bank clearing system and directly manage the “back end” of their huge volumes of daily transactions.
It might make less sense for a smaller building society or credit union to become a settlement bank, depending on the cost and complexity of what would be involved; it could be cheaper or easier to keep paying the big boys. Our banking system continues to evolve from something vastly different a generation ago when tellers manually administered systems. And the way we pay for stuff has also been changing.
Back in the 1990s before electronic transactions became the norm, cheques were at their peak of popularity – although they have been used overseas since the ninth century. A new study by Payments NZ shows their use continues to fall, halving in less than a decade. But we’re not about to get rid of them entirely; many of us write the occasional cheque but mainly use other payment methods.
Cheques are now our least-popular payment method (behind Eftpos, credit cards, electronic payments and ATMs) and some retailers no longer accept them, but there’s no suggestion they will be phased out just yet. Just as many other products now have their digital equivalent, from magazines to photographs, it looks as if we’ll continue to use a variety of payment systems for a while yet – including cash.
The survey found the reasons people still use cheques include:
- they’re a method of immediate payment – often used for real-estate deposits, tradesmen, council consents and other one-off transactions;
- it’s easy to recognise the payer;
- they suit small organisations with manual
- systems or those needing two signatories;
- they also suit older people who like to donate to charities; and
- they’re seen as safer than cash.
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