Weltnachrichten – AU – Eftpos, BPay, NPP agree to merge to help banks take over card giants

Three domestic payment systems – Eftpos, BPay and NPP Australia – have agreed to close a deal that would create a bigger, more coordinated player better able to compete against US card giants Visa and Mastercard for market share have stolen when making debit payments.

The merger, which requires approval from the Australian Competition and Consumer Commission, also allows banks to coordinate investments to ensure that domestic payments infrastructure remains innovative and transaction data is not lost to offshore tech companies.

Chairman of the Australian Payments Council, Robert Milliner: « The proposed model will allow us to adapt more quickly to changing trends in the digital economy. « Michael O Sullivan

The three companies say that a unified company will reduce payment costs and « will seek to further reduce average merchant fees [paid to banks] ». . They also say that new payment features will hit the market faster.

The proposed deal includes concessions to retail groups who feared a merger could neutralize competitive tensions in the market.

This includes assurances that any company’s near-term plans to introduce new features, including digital identity services, will continue. Users of each system have also been given veto rights in the event the new company makes a proposal that may affect the quality of any of the existing services.

According to the proposal, the three payment systems will remain separate entities but will be managed by a single board. This should allow banks to coordinate the introduction of new features while reducing twice the operating costs.

Major banks are looking to accelerate investments in Eftpos’ online services as Visa and Mastercard dominate online transactions. Visa and Mastercard networks are also the default for cards that use tap and go payments to get a share of the home system.

The negotiations were overseen by Australian Payments Council Chairman Robert Milliner, who chaired an industry committee that worked with stakeholders across all programs for four months.

The big banks own all three companies, but NPP, Eftpos and Bpay each have different combinations of shareholders. For example, Coles and Woolworths are shareholders in Eftpos, while the RBA is shareholders in the NPP.

As part of a public merger approval process, the ACCC is asked to approve the deal on the grounds of public interest. The application will be submitted in March and a decision is expected by June. Coles and Woolworths support the deal as does Tyro, which provides payment services to smaller businesses.

Visa and Mastercard have aggressively moved beyond card payments, including the development of real-time account-to-account services in a number of countries that could compete with the NPP.

Mastercard has focused on digital identity services, in which the big banks want to play a key role too. In the UK, Mastercard acquired the domestic debit system set up by a group of UK banks in 2002, which resulted in the US giant becoming the dominant player in UK debit payments and the banks losing influence.

After the Master Grocers Association wrote to the ACCC in September to express concerns about the merger business and with COSBOA (Council of Small Business Organizations of Australia) critical of the potential for small businesses to pay higher fees, Stephen Benton , EFTPOS CEO said, « All of our members have supported this and we would tell small retailers, ‘We will continue to be as competitive as we are today. ‘. This benefits all gamers, including small retailers. « 

Mr. Milliner said improving the system for users has been the main driver. The committee considered the results in terms of « innovation, efficiency, cost and availability that should benefit all users of the system, whether small or large, » he said.

The proposal is in line with the Ministry of Finance’s review of the regulatory architecture of the payment system. « We have tried to keep all the benefits of the existing systems – back to the interests of small and medium-sized users – and a structure that manages the technology and consumer usage that are changing rapidly, and a consistent approach to innovate and help all users « said Milliner.

John Banfield, CEO of BPay, said working under a single board will allow banks to do development more smoothly. « Sequencing means you don’t put pressure on banks to provide multiple services, and it ultimately means a far better range of services for consumers, » he said.

Adrian Lovney, CEO of NPP Australia, which operates the real-time payments system that moves funds between bank accounts and fintechs will soon initiate payments, said the rules for the three systems would « continue to allow open and closed systems » discriminatory access As they do today, « product innovations already on the train will continue and users will be given the right to veto fundamental changes in service operations. ».

The ACCC will review all conditions during the approval process, which will be open to public filings in the second quarter of the 2021 calendar.

With global credit card systems having a stranglehold on processing online e-commerce, banks want the combined company to help them store payment data that is used from determining customer preferences to pricing credit.

Referring to Google and Apple, Philip Lowe, governor of the Reserve Bank, said last week that large technology companies involved in payments « have very large user bases and benefit from strong network effects that can make it difficult for competitors « While » data analysis is part of their DNA and they have become increasingly effective in commercializing the value of the data they collect and analyze. « .

It was important that card issuers continue to support dual network cards, and « the systems do not behave in a way that inappropriately discourages merchants from doing the lowest cost routing for Eftpos payments, » the governor said.

NPP Australia proposed merging the three domestic payment systems in June. This happened after Dr.. Lowe raised the idea of ​​consolidating systems in a speech a year ago after the November 2019 RBA Payments Review Paper also raised the issue.

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New payment platform, BPAY, EFTPOS