In a broadly applauded reversal of its views, the Australian Competition and Consumer Commission has authorised the merger of BPAY Group, Eftpos Payments Australia and NPP Australia, relying on commitments given by the parties in a court enforceable undertaking.
The merger was opposed by a number of groups representing retailers and other merchants, who argued that the merged entity would have no incentive to pursue cost-saving developments in electronic payments.
A particular concern was with the rollout of least cost routing, which allows merchants to choose the payment network with the lowest merchant fees. As consumers use less cash and rely more on debit cards and digital wallets for payments, transaction fees are a growing cost for business.
The general view was that the big banks would have effective control of the merged entity and would have no interest in transferring any benefits from the merger to small business.
BPAY is owned by the Big Four banks. Eftpos has 19 members, including the big banks, some smaller banks, and Coles and Woolworths. NPPA has 11 shareholders, including the big banks, smaller banks and the Reserve Bank.
EPAL, NPPA and BPAY will operate as three separate companies, with AP+ determining a unified investment roadmap for the three payment schemes.
The merger parties offered a court enforceable undertaking seeking to address concerns that the merger could result in a reduction in investment in and support for Eftpos, which would decrease the availability of least cost routing.
Alexi Boyd, CEO of COSBOA, which helped mobilise the merchants’ lobbying campaign, took a phlegmatic view of the outcome on a merger the merchant alliance at first opposed.
“We’re pleased … and cautiously optimistic.”
The ACCC’s approach “will ensure actionable scrutiny”, Boyd said.
Under the proposed undertaking, the merged entity, Australian Payments Plus, would ensure that Eftpos will do everything in its control to make LCR available for four years, and ensure the Eftpos scheme and Eftpos card-issuing and acceptance infrastructure will be maintained for three years.
The merger parties have also committed to ensuring that BPAY, Eftpos and NPPA agree to an industry standard for payment with QR codes by the end of June 2022.
Revving up QR code payments in Australia (at present trivial) may well emerge as the leading product priority for AP+, with Eftpos, following a swift build, already live with one gateway and abundant interest in form of payment well known and popular in many Asian markets.
Submissions in response to the AP+ undertaking argued its terms were too vague and the proposed term too short.
The ACCC said it was satisfied that, with the undertaking, the amalgamation will not have a significant adverse impact on Eftpos’ services or the availability of LCR.
“The Reserve Bank of Australia, the regulator of payment systems in Australia, will also continue to take action to safeguard the availability of east cost routing,” it said.
The ACCC said there could be a public benefit from the merger because it would enable the three groups to co-ordinate investments and avoid duplication. “This will increase the likelihood of the major banks and other