Tyro, Australia’s foremost payments fintech, will become “the exclusive merchant acquiring partner” for Bendigo and Adelaide Bank, an arrangement that will roll out over early next year.

The agreement with Tyro will reduce complexity, the bank said, with Bendigo throwing aside as many as eight legacy suppliers of hardware and services to just one.

Tyro will switch the payments, replacing Cuscal.

‘With our focus on micro to small business customers, it became obvious Tyro was the best for us and best in market,” Bruce Speirs, head of business banking told Banking Day.

The profits generated for the bank from merchant acquiring “is not a material number for us,” Speirs said.

“The level of investment you need to continue to be a provider in this space is material.”

In an investor presentation on Friday Tyro said “Tyro’s gross profit share (after gross profit share to Bendigo Bank and before operating costs) will be approximately $19 million” over a full year, an estimate based on Tyro’s processing around $5 billion in transaction value for Bendigo’s SME clients.

Tyro will pay the bank an upfront fee of $9 million. The mechanics of the profit share are not disclosed.

Bendigo is selling Tyro assets the merchant service contracts.

Tyro already processes more than four times as much payments volume as Bendigo.

The fintech will manage a fleet of 90,000 payments terminals by mid next year, about one third smaller than that of Westpac.

Commonwealth Bank overshadows all in this segment, boasting more than 255,000 merchant acquiring customers, so any ACCC doubts around this pooling of interests are likely to be minimal.