The ACCC has cleared the proposed merger of BPAY Group Holding Pty Ltd and its subsidiaries (together, BPAY), eftpos Payments Australia Ltd (eftpos) and NPP Australia Ltd (NPPA), after accepting a binding undertaking offered by the parties. BPAY, eftpos and NPPA each provide payment services to consumers and businesses through their respective payment systems, BPAY, eftpos and the new payment platform. ACCC Chairman Rod Sims said the merger of these parties will not significantly reduce competition in any payments market, after taking into account the binding commitment by the courts. The ACCC found that at a high level, the services of the three companies do not compete closely with each other.
“We looked at a number of potential competitive impacts, including concerns raised by industry participants about the impact of the merger on eftpos services and lower cost routing. eftpos is important to the availability of Least Cost Routing, as the only current alternative network to Visa and Mastercard networks through which debit transactions can be routed, ”said Sims.
Sims added that Least Cost Routing allows merchants to choose the payment method that processes transactions when consumers use a dual-network debit card. This can help reduce the fees that merchants pay for processing debit card payments. The ACCC recognized that while rapid changes are taking place in the industry, with the company, the merger will not negatively impact e-mail services or the availability of lower cost routing.
“The Reserve Bank of Australia, the regulator of payment systems in Australia, will also continue to take steps to ensure the availability of low-cost routing. With the commitments made in the Commitment, Reserve Bank oversight will minimize the risk that eftpos will be reduced or that lower-cost routing will become less available, ”Sims said.
In the commitment accepted by the ACCC, the parties to the concentration have undertaken to ensure that, for a period of four years, eftpos will do everything in its power to make transmission available at a lower cost and promote it, and ensure that the eftpos payment system and eftpos card-based issuance and acceptance infrastructure and services are maintained. The commitment also requires the merging parties to ensure that eftpos and the NPPA develop and make available a prescribed set of services within the agreed timeframe; these include fraud prevention measures and technical developments that will allow online and integrated payments to be made using eftpos debit cards.
The merging parties have also committed to ensuring that BPAY, eftpos and NPPA accept an industry-wide standard that supports payment with QR codes by the end of June 2022. This will be done in coordination. with Australian Payments Network Limited.
“We accepted the commitment because we believe it will help ensure that eftpos develops and improves its debit payment services for point-of-sale, online and in-app payments,” said Sims.
Along with examining the likely impact of the merger on eftpos and lower cost routing, the ACCC also examined the potential for broader competitive impacts. The ACCC found that competition between eftpos, BPAY and NPPA payment services is marginal, as their basic payment services are intended for different uses and are largely complementary.
“Banks have an influential role in which payment services to implement and would be reluctant to support multiple and overlapping payment service initiatives with or without the merger,” said Sims.
Sims noted that the merger would likely soften competition between BPAY, eftpos and NPPA in some areas where they were looking to expand beyond their core offering or compete with each other to bring new services to market. However, this is unlikely to lead to a substantial decrease in competition, as strong competitors will remain, including Visa and Mastercard. Sims added that the merger will also allow the three payment systems to coordinate investment proposals and avoid inefficient redundant spending. This will increase the likelihood that large banks and other shareholders will invest in domestic payment services.
“This is likely to benefit the public, putting them in a better position to implement payment service initiatives faster and more successfully, to benefit consumers and businesses,” Sims said.