Increased staff expenses have chewed into the profit of payments challenger Tyro.Net profit for the firm fell 70 per cent to A$2.9 million in the year to June 2014, during in a year in which key product lines showed decent growth. This was only the second year Tyro produced  a profit.Fee income increased 36 per cent to $51.3 million thanks to a rise of one quarter in the number of merchants (to 10,100) and in transactions processed (to $5.5 billion).Tyro have thus achieved a market share of close to two per cent in credit card and debit card payments.In the health segment, Tyro said it processed more than one million Easyclaim payments and put its market share at "in excess of 11.6 per cent of GP professional attendances in Australia."Jost Stollman, CEO of Tyro, explained in an email that "the most important driver of staff expenses is the doubling of the engineering team."That reflects our optimism about all the opportunities to bring better payment solutions to Australia's small-to-medium merchant community."The firm placed $700,000 in new shares during the year, with accumulated losses now $16 million seven years after penetrating the Eftpos market.Tyro remains an informed contributor to the work of the Financial System Inquiry.In Tyro's second submission Stollman wrote that "while the banking sector has been seen by the Inquiry as competitive, albeit concentrated, the experience for new entrants is otherwise. "There is a lot of innovation at the banking periphery, but access to the core banking space is barred by anti-competitive structures and behaviours. "That stifles Tyro's and other new entrants' efforts to bring innovative, less expensive financial and banking services to Australian consumers and small business market," he wrote. "Due to its network nature, the payment industry requires a strong set of standards and rules to protect integrity and stability as well as access of the system. "Rules may need to be differentiated to reflect the differences between broad-line and mono-line ADIs, rated and non-rated ADIs, new entrant and incumbent providers. "If the financial system encouraged innovative, start-up and growth companies through open access and a level playing field instead of locking them out, there would be more companies such as Tyro starting and scaling up in Australia instead of Silicon Valley," Stollman concluded.