ACCC authorises EFTPOS-BPAY-NPP payment systems merger

ACCC authorises EFTPOS-BPAY-NPP payment systems merger

The ACCC has authorised the proposed merger of payment systems’ eftpos Payments Australia, BPAY and NPP Australia (New Payments Platform) after accepting a court-enforceable undertaking offered by the parties.

eftpos, BPAY and New Payments Platform each provide payment services to consumers and businesses through their respective payment systems.

“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 least 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,” Sims said.

“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,” Sims said.

“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,” Sims said.

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 timeframes.

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 eftpos, BPAY and NPPA agree an industry wide standard supporting payment with QR codes by the end of June 2022. This will be in coordination 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,” 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,” 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 substantiall lessening of competition because strong competitors will remain, including Visa and Mastercard.”

“Further, the merger will enable the three payment schemes to coordinate 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,” Sims said.

“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.”