Green light for Cuscal's SPS takeover

Cuscal shareholders have voted in favour of the company's proposed acquisition of Strategic Payment Services, setting the company up to be a significant player in the payments market that will emerge with the development of the New Payment Platform.

Last month Cuscal announced that it planned to buy SPS from its joint owners, Bendigo and Adelaide Bank and MasterCard.

Shareholders approved the deal at a meeting yesterday. The acquisition price has been reported to be A$34 million, with payment in the form of an issue of shares to the vendors. Bendigo and Adelaide and MasterCard will each own ten per cent of Cuscal.

Cuscal managing director Craig Kennedy said the merged entity would have the scale and capabilities to compete across the full payments spectrum.

He said Cuscal offered a broader range of services than SPS but SPS had a deeper involvement in merchant acquiring.

Both companies offer ATM services - Cuscal through its network of 7000 redi ATMs and SPS through a number of switching contracts.

Other features of the merged group include digital and mobile infrastructure, connection to all cards and payment schemes, a real-time payment platform and a tokenisation and secure vault system.

He said Cuscal was in a unique position as the only wholesale payments company that was also an authorised deposit-taking institution, meaning it was able to deliver banking and payment services across the payments value chain.

He said this would be an advantage as the NPP was developed. "We have been a participant in the NPP since day one. In the past we played catch-up as we developed a business to operate in an environment that others had created. With NPP, we are there from the beginning."

The opportunity for third party agreements under NPP would expand Cuscal's client base, he said.

Until a few years ago, Cuscal operated a funding business alongside its payments operations but that business has been discontinued.

Kennedy said the funding business made sense when there were 500 small mutuals in the market needing funding support. But consolidation in the industry has meant that most of the large mutuals have the capacity to support their own funding needs.

"What we offered became irrelevant," he said.