The competition watchdog has approved the merger of BPAY Group, eftpos, and NPP Australia to form a new scheme called Australian Payments Plus after finding the three companies do not compete closely.
The ACCC considered many potential impacts on competition, including concerns raised by industry participants on the impact of the merger on eftpos’ services and least cost routing.
“eftpos is important to the availability of least-cost routing, as the only current alternative network to the Visa and Mastercard networks through which debit transactions can be routed,” said ACCC chair Rod Sims.
“Least cost routing allows merchants to choose the payment scheme that processes transactions when consumers use a dual-network debit card. This can help to reduce the fees merchants pay for the processing of debit card payments.”
The head of the antitrust regulator said he was ultimately satisfied that, with several court-enforced undertakings, the merger will not harm eftpos’ services or the availability of least cost routing.
“Together with the commitments made in the undertaking, the oversight of the Reserve Bank will minimise the risk that eftpos is diminished or that least cost routing will become less available.”
The merger parties have promised to ensure that, for at least four years, eftpos will do everything in its power to make least cost routing available and promote it, he said.
They must ensure the eftpos payments scheme and the eftpos card-based issuing and acceptance infrastructure and services are maintained.
The merger parties must also ensure that eftpos and NPP develop and share a set of prescribed services such as fraud prevention measures as well as technical developments that will allow online and in-app payments to be made using eftpos debit cards.
Further, BPAY, eftpos, and NPP have agreed on an industry-wide standard supporting payment with QR codes by the end of June 2022.
“We accepted the undertaking because we consider it will help ensure that eftpos will develop and improve its debit-based payment services for point of sale, online and in-app payments,” Sims added.
In addition to considering the likely impact of the merger on eftpos and least cost routing, the ACCC also considered the potential for broader competition impacts.
The competition regulator found that competition between the payment services of eftpos, BPAY, and NPP is marginal because their core payment services are for different uses and are largely complementary.
“The banks have an influential role in deciding what payment services to implement and would be reluctant to support multiple and overlapping payment service initiatives with or without the merger,” Sims said.
Sims warned that the merger will likely soften competition to some extent between BPAY, eftpos, and NPP in certain areas where they were looking to expand beyond their core offerings or competing to bring new services to market.
However, he went on to say this is unlikely to result in a substantial lessening of competition because strong competitors will remain, including Visa and Mastercard.”
Moreover, he added, the merger will enable the three payment schemes to coordinate investment proposals and avoid inefficient duplicative spending. Importantly, this will increase the likelihood of the major banks and other shareholders investing in domestic payment services.
“This is likely to result in public benefit, by placing them in a better position to deliver payment service initiatives more quickly and successfully, for the benefit of consumers and businesses.”
Stephen Benton, eftpos chief executive said the national payments network is very much looking forward to working as part of Australian Payments Plus. I
“It is an exciting new chapter in our 37-year history of delivering payments competition and choice to Australian consumers and businesses.
“There is strong alignment between AP+ and the eftpos purpose of “doing good for Australia” and this alignment will see eftpos continue to drive competition and innovation in debit card payments and digital while pursuing new opportunities to innovate with other parts of the new AP+ organisation.”