Tyro partners with Bendigo Bank to create a long-term merchant acquiring alliance

Tyro partners with Bendigo Bank to create a long-term merchant acquiring alliance

Tyro today announced it is partnering with Australia’s fifth biggest retail bank, Bendigo Bank, to create a long-term merchant acquiring alliance.

Under the alliance, Tyro will deliver its leading card-present and card-not-present payments solutions to Bendigo Bank’s merchant acquiring customers, providing greater functionality, more payment options, enhanced reliability and seamless cloud integration to more than 300 point of sale systems. Bendigo Bank will continue to provide all other banking services to these customers. Tyro expects to deploy more than 26,000 Tyro terminals in 2021 for the alliance, increasing its terminal fleet to just above 89,000 terminals.

The parties have today entered into a suite of definitive legal agreements with the following key features:

  • The key joint objective of the alliance is to provide a best-in-class payments solution to Bendigo Bank’s business customers.
  • Tyro will exclusively provide merchant acquiring services to Bendigo Bank’s existing merchant acquiring customers and Bendigo Bank will exclusively refer new merchant opportunities from its business customer base to Tyro, all under a co-brand.
  • Economic benefits of Bendigo Bank’s existing merchant service contracts will move to Tyro on completion (expected to occur in the first half of calendar 2021):
  • Tyro is purchasing Bendigo Bank’s existing merchant acquiring arrangements (essentially its merchant service contracts and associated goodwill);
  • Bendigo Bank will receive upfront consideration of $9 million and an on-going gross profit share from existing and newly referred Bendigo Bank business customers who use Tyro’s merchant acquiring services; and
  • the alliance has an initial 10-year term with provision for extension by agreement for additional five-year terms.
  • Bendigo Bank will provide transitional services to Tyro for an expected 90 days from completion to enable Tyro to progressively deploy its payments solutions to Bendigo Bank business customers.
  • On expiry of the alliance, all Bendigo Bank transferred and referred customers remain with Tyro, with Bendigo Bank’s gross profit share to continue while those customers are served by Tyro.

Tyro’s costs associated with implementing the alliance (excluding any applicable taxes) are expected to be as follows:

  • one-off project resourcing – $3.8 million1;
  • one-off other project costs (including terminals) – $16.1 million2;
  • ongoing additional personnel costs to support the alliance are expected to be $6.7 million per annum3.

It is expected that4:

  • Bendigo Bank’s business customers will generate approximately $5 billion in transaction value in FY22;
  • Tyro’s gross profit share (after gross profit share to Bendigo Bank and before operating costs) from the Bendigo Bank cohort will be approximately $19 million in FY22.

Commenting on the transaction, Tyro’s CEO and Managing Director, Robbie Cooke said, “The alliance with Bendigo Bank is an exciting combination of Australia’s fifth biggest retail bank with the fifth largest merchant acquiring bank.

Partnering with Bendigo Bank will see Tyro’s leading proprietary payments platform made available to Bendigo Bank’s current and future business customers – giving them access to more features, more payment options and seamless integrations to more than 300 point of sale systems.

Tyro will deploy its payments expertise to Bendigo Bank’s business customers, with Bendigo Bank continuing to provide all other banking services to these customers under a long-term, collaborative and strategic alliance.

This is a great example of two customer focused Australian organisations coming together to provide better solutions for Australian businesses through a partnering of capability and expertise.”

Bruce Speirs, Executive Business Banking, Bendigo Bank, said the new alliance with Tyro and development of a new joint offering – Bendigo Bank EFTPOS/eCommerce powered by Tyro – is a positive development for its business banking customers and its strategy. He said, “In line with our strategy to invest in capability and reduce complexity, we are reshaping our merchant services offering to help customers better run their businesses and further improve the market-leading customer experience we provide.

Our new agreement with Tyro is an exciting development and I look forward to working together to simplify our product offering and provide enhanced capacity to better support our business banking customers.”

[1] Expected to be fully incurred in FY21

[2] Expected to be fully incurred in FY21

[3] Expected to commence Q3 FY21

[4] Based on existing Bendigo Bank merchant numbers, merchant acquisition and churn rates continuing as experienced historically and COVID-19 impacted merchants recovering by the end of FY21