Small business groups say they want Eftpos Australia to continue as a stand-alone payments scheme despite undertakings that its services will continue to be supported if the merger with NPP Australia and BPay is approved.
The ACCC has called for submissions from payments sector stakeholders after it received draft undertakings last week from the industry committee trying to amalgamate the operations of NPP Australia, Eftpos and BPay.
A copy of the draft undertakings, which address ACCC concerns that the merger could result in reduced support for Eftpos Australia’s operations and undermine the availability of least cost routing to small retailers, was made public on Friday.
Least cost routing, a service that the major banks are slowly rolling out to small businesses, allows retailers to choose whether contactless debit transactions are processed through the global payments schemes (Visa and Mastercard) or are routed to the lower cost Eftpos network.
The banks have been reluctant to offer the service to merchants, partly because they stand to lose revenue as more retailers move to route transactions through Eftpos.
While the four major banks – NAB, CBA, ANZ and Westpac - are the main shareholders of Eftpos, NPP and BPay, they have not each given direct undertakings to the ACCC pledging support for least cost routing if the three-way merger is approved.
Instead, the draft undertakings given to the regulator have been made through the newly-created holding company for the proposed merger, Australian Payments Plus Limited (AP+).
The undertakings, which expire three years after regulatory approval of the merger, require AP+ to allow Eftpos to “do all things in its control to make available least cost routing”.
They also require AP+ to support efforts to extend least cost routing to online debit transactions, including in-app purchases.
Robert Milliner, the chair of the industry committee applying to amalgamate the three schemes, said the undertakings highlighted the combined entity’s commitment to provide least cost routing (LCR).
“We believe the draft undertakings reinforce our commitment to facilitate LCR and maintain eftpos’ services and infrastructure,” he said.
“They also reflect the agreement to deliver a set of specific payments innovations (described as prescribed services) over the next two years – the majority of which will strengthen eftpos and its ability to compete with international card schemes.”
Small business advocates question whether the undertakings are sufficiently robust to deliver a meaningful improvement in the provision of least cost routing services by the banks.
COSBOA director Mark McKenzie believes the undertakings will have little effect unless the major banks give individual commitments to roll out LCR services to businesses.
“The undertaking for least cost routing is effectively being given by Eftpos when really the decisions on whether those rollouts proceed depends on investors in the proposed merged entity – the major banks,” he said.
“The proposed three year duration of the undertakings given by Australian Payments Plus is also way to short.
“We would expect to see undertakings for at least seven years.”
McKenzie, who is also CEO of the Australasian Convenience and Petroleum Marketers Association, said his members were deeply concerned about the costs of accepting