Competition regulator approves eftpos, BPAY and NPPA merger

After a lengthy approval process the competition watchdog has given the green light for BPAY, eftpos and NPP Australia to merge under the banner of Australian Payments Plus.

The Australian Competition and Consumer Commission (ACCC) announced its decision today, authorising Australian Payments Plus (AP+) merger of the three payments systems, which it will keep as separate brands. 

Rod Sims, ACCC chair, acknowledged the decision, saying the regulator didn’t consider the three companies to be close competitors because their services cater to different parts of the payments market.

Eftpos facilitates general retail transactions, BPAY is used to process bill payments and NPP is used by large corporate players to process fast and high volume transactions.

“We do not consider that the merger of these parties will substantially lessen competition in any payments market, after taking into account the court-enforceable undertaking,” Sims said.

Before approving the merger, the ACCC assessed how it would affect competition within the country’s payments system and the concerns raised by industry participants.

Small business groups and industry associations were primarily concerned that the merger would reduce the availability of least cost routing, which is when debit transactions are processed at the cheapest cost for merchants.

Sims said eftpos is vital to the availability of least cost routing because it’s the only alternative to the other two networks — Visa and Mastercard — that can process debit transactions. 

“The Reserve Bank of Australia, the regulator of payment systems in Australia, will also continue to take action to safeguard the availability of least cost routing,” Sims said.

Backing the new AP+ are the four major banks that already make up the majority shareholders of eftpos, BPAY and NPP Australia. Westpac, ANZ, CBA and NAB will continue to be the majority shareholders of the new merged entity.

Current shareholders of the three payment platforms including Coles, Woolworths, Cuscal, Tyro, Bendigo Bank, Adelaide Bank, ASL, Fizerv, Macquarie Bank and HSBC will continue as shareholders of AP+, except for the Reserve Bank of Australia.

AP+ welcomed the ACCC’s approval of its proposal in a statement released today, reaffirming that the three entities and brands will be maintained but report to a single board.

Robert Milliner, chair of the Industry Committee leading the proposal, said the amalgamation will create a more “innovative” entity that can compete against international card schemes and big tech.

“This is an exciting day for all users of Australia’s payments system, as we are now in a position to better coordinate investments in payment innovations, bring new products to market faster and work together to bring down transaction costs,” he said.

AP+ is currently recruiting 13 directors to its board which it will complete by the end of the year.