Retirement Life
22 May 2024

Are you breaching your bank’s T&Cs?

If you’ve ever booked flights online you’re probably familiar with the option to pay by POLi. It’s hard to ignore when it’s the only option that doesn’t come with relatively hefty transaction fees.

However, Consumer NZ is warning that almost half of New Zealanders could have breached their bank’s terms and conditions (T&Cs) by using POLi as a payment method.

“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 T&Cs.

“If you breach your bank’s T&Cs, it could compromise the little protection you have if you become a victim of fraud.”


What are POLi payments?

POLi lets people pay a merchant directly from their bank account 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.

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“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 T&Cs by using POLi, while ANZ and Kiwibank customers may breach their bank’s T&Cs if they opt to use the payment method.

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


Our payment infrastructure lags peers

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.


Putting the ball back in the Banks’ courts

“In our view, banks should either stop people from using POLi or specify in their T&Cs that customers can use it, said O’Shea.

“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.”

If you’re unsure whether using POLi puts you at risk of breaching your bank’s T&Cs, it would pay to check in with your provider directly.

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Photo of Vanessa Glennie
Written by:

Vanessa Glennie

Vanessa is Head of Communications at Lifetime Retirement Income. She’s an experienced investment writer, having spent more than a decade writing about financial markets in the global fund management industry.

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