BPAY, eftpos and NPPA each provide payment services to consumers and businesses through their respective payment systems: BPAY, eftpos and the New Payments Platform.
“We do not consider that the merger of these parties will substantially lessen competition in any payments market, after taking into account the court-enforceable undertaking,” ACCC chair Rod Sims said.
“The ACCC found that, at a high level, the services of the three companies do not compete closely. We considered a number of potential impacts on competition, including concerns raised by industry participants about the impact of the amalgamation on eftpos’ services and leas-cost routing.
“eftpos is important to the availability of least-cost routing as the only current alternative network to the Visa and Mastercard networks through which debit transactions can be routed. Least-cost routing allows merchants to choose the payment scheme that processes transactions when consumers use a dual-network debit card. This can help to reduce the fees merchants pay for the processing of debit card payments.
“The ACCC recognises that rapid change is taking place in the sector, but ultimately, it was satisfied that, with the undertaking, the amalgamation will not have a significant adverse impact on eftpos’ services or the availability of least-cost routing.”
He added: “The Reserve Bank of Australia, the regulator of payment systems in Australia, will also continue to take action to safeguard the availability of least-cost routing.
“Together with the commitments made in the undertaking, the oversight of the Reserve Bank will minimise the risk that eftpos is diminished or that least-cost routing will become less available.”
In the undertaking accepted by the ACCC, the merger parties have committed to ensure that, for a term of four years, eftpos will do everything in its control to make least-cost routing available and promote it, and to ensure the eftpos payments scheme and the eftpos card-based issuing and acceptance infrastructure and services are maintained.
The undertaking also requires the merger parties to ensure that eftpos and NPPA develop and make available a set of “prescribed services” within agreed time frames. These prescribed services include fraud prevention measures and technical developments that will allow online and in-app payments to be made using eftpos debit cards.
The merger parties have also committed to ensuring that BPAY, eftpos and NPPA agree on an industry-wide standard supporting payment with QR codes by the end of June 2022. This will be in co-ordination with Australian Payments Network Limited, Australia’s self-regulatory body and industry association for payments.
“We accepted the undertaking because we consider it will help ensure that eftpos will develop and improve its debit-based payment services for point of sale, online and in-app payments,” Mr Sims said.
In addition to considering the likely impact of the merger on eftpos and least-cost routing, the ACCC also considered the potential for broader competition impacts.
The ACCC found that competition between the payment services of eftpos, BPAY and NPPA is marginal, because their core payment services are for different uses and are largely complementary.
“The banks have an influential role in deciding what payment services to implement, and would be reluctant to support multiple and overlapping payment service initiatives with or without the merger,” Mr Sims said.
“The merger will likely soften competition to some extent between BPAY, eftpos and NPPA in certain areas where they were looking to expand beyond their core offerings or competing to bring new services to market. However, this is unlikely to result in a substantial lessening of competition because strong competitors will remain, including Visa and Mastercard.
“Further, the merger will enable the three payment schemes to co-ordinate investment proposals and avoid inefficient duplicative spending. Importantly, this will increase the likelihood of the major banks and other shareholders investing in domestic payment services. This is likely to result in public benefit, by placing them in a better position to deliver payment service initiatives more quickly and successfully, for the benefit of consumers and businesses.”
Further information, including the ACCC’s determination, is available on the ACCC’s public register at Proposed amalgamation of BPAY, eftpos and NPPA.
BPAY, eftpos and NPPA are each providers of payment services, and each own and operate payments infrastructure. BPAY’s core service facilitates bill payments. eftpos’ core service facilitates retail debit card payments. NPPA’s core service facilitates fast account-to-account payments.
The four major banks collectively are already the majority shareholders in eftpos, BPAY and NPPA and will continue to be the majority shareholders of the new merged company. All current shareholders of BPAY, eftpos and NPPA will continue as shareholders of the new merged company, except the Reserve Bank of Australia.
Industry Committee Administration Pty Ltd sought merger authorisation for the proposed amalgamation on behalf of shareholders and/or members of BPAY, eftpos and/or NPPA.
During the authorisation review process, the ACCC has consulted with the Reserve Bank of Australia as Australia’s payment systems regulator rather than as a shareholder of NPPA. The Reserve Bank of Australia has abstained from discussions with the NPPA board on the merger proposal and did not exercise its right to be represented by Industry Committee Administration Pty Ltd who applied for merger authorisation.
Least-cost routing refers to the ability for merchants to choose whether payments made using eftpos/Visa- or eftpos/Mastercard-denominated dual-network debit cards are processed by eftpos, or by Visa or Mastercard, which affects the fees a merchant has to pay.