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8 May 2024

Consumer NZ unpacks the popular payment method that could void your bank protection

Almost half of New Zealanders could have breached their bank’s terms and conditions by using POLi as a payment method, according to Consumer NZ.

“POLi is a popular payment method because it’s a way to avoid surcharges,” said Ruairi O’Shea, investigative writer at Consumer.

“However, using POLi comes with considerable risks as it probably means you have breached your bank’s terms and conditions.

“If you breach your bank’s terms and conditions, it could compromise the little protection you have if you become a victim of fraud.”

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What are POLi payments?

POLi enables people to make a payment directly from their bank account to a merchant without incurring fees from a payment service provider like Visa or Mastercard. However, POLi needs the user to provide their bank log-in details so the merchant can generate the payment.

“This is a direct contradiction to the advice we repeatedly hear from banks – you should never share your banking log-in details.

“Confusion arises because many trusted and well-known organisations offer POLi as a payment method – including Air New Zealand, Bunnings and even Waka Kotahi. We think this leads people to believe POLi is trusted by their banks,” said O’Shea.

POLi’s website displays all the major banks’ logos, which adds to Consumer’s concerns that New Zealanders believe POLi is endorsed by banks.

“Using POLi could create the impression that there are times when it is safe to give away your internet banking log-in details. A consumer might not lose their money using POLi, but the lessons they’ve learned using it could cause them to lose money in the future, and they’re unlikely to get that money back.”

What the banks say

ASB, BNZ and Westpac customers breach their bank’s terms and conditions by using POLi, while ANZ and Kiwibank customers may breach their bank’s terms and conditions if they opt to use the payment method.

While Kiwibank told Consumer that using POLi “may" breach its terms and conditions, the bank’s Internet Banking Guarantee mentions POLi specifically, and says “the use of third-party services like this invalidates our internet banking guarantee, not just for the affected transaction, but for all subsequent internet banking use too".

TSB’s terms and conditions specify that its customers should not enter pins or passwords into a third-party website or app. The Co-operative Bank’s terms and conditions recommend not sharing passwords with anyone.

Why New Zealanders use POLi

POLi shut down its Australian operations last year.

“Australia’s banking infrastructure has evolved to the point that POLi is redundant there – ours hasn’t.

“Right here, right now, our options are a payment service provider, like VISA or Mastercard, which come with fees, or potentially breaching your bank's terms and putting yourself at risk by using POLi,” said O’Shea.

“We are missing out on fast payment systems that exist in many other countries and allow customers to make instant payments to merchants.”

A World Bank report released in 2021 listed New Zealand’s fast payment system as “under development”, on par with Yemen and the Maldives. According to Payments NZ, New Zealanders will be able to make real-time payments by 2030.

“In our view, banks should either stop people from using POLi or specify in their terms and conditions that customers can use it.

“In the meantime, we have to wait for our banking sector to catch-up, so New Zealanders don’t have to choose between payment surcharges or breaching their bank’s terms and shouldering the associated risks.”

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