How ESAS fits in the payments system
ESAS is the system where transactions between financial organisations are ultimately settled.
Moving money electronically takes a series of complex steps and checks. First there’s an instruction that a payment should be made. Then there’s an authorisation process to confirm the payer has the funds available and there are no holds or other reasons the payment could be stopped. If the payment is authorised, it can be cleared.
Clearing is the process of confirming the payment information is correct and passing it on for final settlement. During clearing, the payment message is checked to ensure it follows clearly defined rules so that the payment instruction is standardised and easily recognised.
Settlement of the transaction, which occurs in ESAS, is the last step and happens when the funds are exchanged. Final settlement means the payment has been completed and cannot be reversed.
There are specialised clearing systems, rules and security measures at each stage of the electronic payment process, to make sure transactions are handled safely and correctly. This is essential because the soundness of our financial system depends on accurate and reliable transactions.
ESAS processes around $25 billion-worth of transactions daily. To keep ESAS safe, all payments to ESAS are submitted through secure interfaces. These interfaces keep transactions safe in transit, and make sure that the right steps and checks have occurred before funds move across ESAS to be settled. This is vital because settlement in ESAS is instant (real time) and final.
The image below shows the systems and processes involved in electronic transactions before they get to ESAS for settlement.
Get a detailed view of the New Zealand payments landscape: New Zealand’s Payment Landscape: A Primer
Top 2 rows:
Background arrangements
Row 1:
Settlement system
ESAS
Row 2:
Clearing system and services
HVCS - AVP. Arrow pointing down.
BECS - SBI. Arrow pointing up.
Bottom 2 rows:
Frontend arrangements
Row 3:
Instrument, gateways and services
Interbank Payment DD, DC, AP, BP, EC.
Arrow pointing up.
Row 4:
Overlay services
Payments initiations, account services, other
Mobile wallets and closed loop systems.
Arrow pointing up.
Acronyms:
- DD = Direct debit
- DC = Direct credit
- AP = Automatic payment
- BP = Bill payment
- EC = All other electronic payments
- HVCS – AVP relates to the High Value Clearing System
- BECS – SBI relates to the Bulk Electronic Clearing System.
Benefits of real-time gross settlement and ESAS
Real-time gross settlement (RTGS) provides final and irrevocable settlement of transactions in real time by the simultaneous crediting and debiting of exchange settlement accounts held at the Reserve Bank. This reduces the settlement risk posed by deferred, high-value payments between banks and other approved financial organisations.
ESAS makes it easier for financial organisations to achieve RTGS and operate efficiently by providing:
- account maintenance, transaction and ancillary services
- an electronic interface to banks, payment systems or financial organisations (as required)
- functionality for queuing, processing and rejecting transactions.
Improving the stability of the financial system
RTGS allows large payments to be completed transaction-by-transaction throughout the day and be irreversibly posted to exchange settlement accounts at the Reserve Bank before value is credited/debited to customers.
Before RTGS, banks would total their inter-bank obligations at the end of each day and then settle net amounts with each other through their accounts at the Reserve Bank. With RTGS, individual settlement requests between banks and other financial organisations are settled electronically as the settlement requests happen.
RTGS makes the financial system more robust. Previously, if a bank collapsed during the working day, other banks could have been owed very large sums of money from incomplete settlement requests with the failed bank. This could potentially put these other banks and other approved financial organisations at risk, or result in these banks trying to reverse payments, which would create financial chaos.
Moving to the new global payments messaging standard
New Zealand's banking industry is moving to ISO 20022, the new emerging global standard for payments messaging creating a common language for payments data shared across the globe.
Use of Swift messaging also underpins our fundamental functions such as managing liquidity in the domestic economy, and New Zealand’s foreign reserves.
We adopted a coexistence strategy supporting both the existing FIN (MT) and new ISO 20022 (MX) messaging formats in ESAS.
NZClear does not have any mandatory changes for securities messaging and transfers at this time.
Ultimately, adopting ISO 20022 will provide richer data at the transactional level within the payments ecosystem enabling faster processing and future innovation. Already used by payment systems in over 70 countries, in the coming years ISO 20022 will be the de facto standard for high-value payment systems of all reserve currencies.
At the request of the Swift community, and with support of the Swift board, Swift placed a higher priority on migrating CBPR+ payment instructions to ISO 20022 by November 2025. For domestic payments sent to ESAS, the migration from MT to ISO 20022 was also November 2025.
Within New Zealand, banks and other financial institutions switched to sending ISO 20022/MX messages at different times, ahead of the 22 November 2025 deadline.
Post November 2025, both Swift and ESAS continues to support MT and MX statement and enquiry messages.
Due to the push for MX payment message compliance by November 2025, and the complexities of MX statements & reporting messages, Swift moved the compliance date for statements and reporting messages out to November 2028.
Other continuing Swift ISO initiatives include:
- creating an exceptions and investigations case management system
- aligning global address standards
- aligning global message standards at domestic market level.
ESAS version 7 upgrade
The ESAS version 7 upgrade project will enable full compliance with ISO 20022, including statement and request message types. We successfully upgraded ESAS from version 6.8 to version 7 in July 2025.
The upgrade means we delivered the second phase of ISO 20022 messaging several months ahead of the SWIFT-imposed deadline of November 2025. The first phase of ISO 20022 messaging (core payment messages) into ESAS was part of the ESAS v6.8 project. The integration of statement and request messages as part of ESAS v7 was the final step in achieving full ISO 20022 compliance. Being ISO compliant several now allows ESAS account holders ample time to adapt their back-office systems to accommodate the new messages.
The July 2025 upgrade activity also delivered several other functional and security enhancements, including a new user interface and a change to the single sign on (SSO) mechanism. This is in addition to an upgrade of the underlying database hardware for ESAS and NZClear, which was included in the project and completed in September 2024.
The upgrade includes technology updates, including implementation of best practice security measures, fortifying ESAS as a contemporary and secure platform within the rapidly evolving financial landscape.
The project's tangible benefits extend to ensuring continuity, mitigating reputational risks, and ultimately safeguarding the interests of ESAS account holders and the institutions they represent.
The project has liaised with and worked closely with industry in preparation for the upgrade.
| Timings | Details |
|---|---|
| November 2022 | ESAS ISO 20022 capability went live |
| 20 March 2023 | Eurozone market switched to ISO 20022 |
| 20 March 2023 to November 2025 | ESAS settlement system supporting coexistence of FIN (MT) format and ISO 20022 (MX) format messaging |
| Mid 2025 | ESAS ISO 20022 reconciliation messages & statements goes live (equivalent of MT900 series) |
| August 2025 | End date for ESAS Account Holders to have completed ISO 20022 payment message testing against ESAS |
| November 2025 | Co-existence end date for FIN (MT) payment messages in SWIFT and ESAS |
| Post November 2025 | ESAS settlement system supporting coexistence of FIN (MT) and ISO 20022 (MX) messaging for statements and enquiry requests |