Small business groups have responded to the proposed merger of Eftpos, NPP and BPay with “cynicism” and “concern”, saying they fear it has potential to remove competitive tension in the payments market.
An industry committee set up by NPP Australia earlier this year announced on Tuesday that the shareholders of the merger candidates unanimously supported a three-way union and would be seeking regulatory clearance from the Australian Competition and Consumer Commission next year.
The merger involves the creation of a single 13-member board to oversee the three payments schemes, with any key decisions on the future of each scheme to be subject to approval of the shareholders that use each particular system.
While Coles and Woolworths are shareholders in Eftpos and the Reserve Bank is a part of owner of NPP Australia, the four major banks – NAB, CBA, ANZ and Westpac – collectively control each of the businesses.
Mark McKenzie, the chair of the peak national small business council, COSBOA, said his organisation had campaigned for many years for least cost routing (LCR) in the contactless debit payments market and was worried that Eftpos’ role as a source of price tension could be undermined by the merger.
He described the proposed governance structure for the merged entity as messy and bizarre.
“Our principal concern is that there could be a loss of competitive tension in the payments market resulting from the merger,” he said.
“It’s a bizarre corporate structure with the three companies operating under one board.
“How does the board ensure there is no cannibalization of one payments method by another?”
The chair of the industry committee – Payments Council kingpin Robert Milliner – believes the merger will unlock “incredible value”.
“Eftpos, BPay Group and the NPPA provide Australians with reliable, safe and affordable payments options every single day,” he said.
“Working together towards common goals, they can unlock incredible value, invest more in innovation and realise cost savings that will ultimately benefit the Australian public.”
However small business leaders and payments experts questioned whether Milliner and the banks could guarantee any alleged benefits would flow to independent retailers and consumers.
For almost three years the four major banks have resisted pressure from regulators to accelerate their LCR rollouts, which has denied thousands of merchants the opportunity to direct contactless debit transactions to the low cost Eftpos network.
The banks stand to lose up to A$550 million a year in merchant fee revenue from offering least cost routing and their laggard rollouts have created mistrust among small business groups.
“I am a bit cynical about this merger proposal,” admits Jos de Bruin, chief executive of the Master Grocers Association.
“We’ve always tried to help drive down the fees that independent grocers incur for accepting contactless and other types of payment.
“Unfortunately, the major banks have been too slow to roll out least cost routing.”
McKenzie and de Bruin said they each had received letters from Milliner to discuss the effects of the merger.
Noting Milliner’s involvement in the Business Council of Australia – the national lobby group for corporate Australia – de Bruin questioned why small business