Invest
ACCC cites LCR as it gives payment processing merger the go-ahead
The local competition watchdog has given its approval of a merger between three major players in Australia’s payment processing sector.
ACCC cites LCR as it gives payment processing merger the go-ahead
The local competition watchdog has given its approval of a merger between three major players in Australia’s payment processing sector.
The Australian Competition and Consumer Commission (ACCC) has given the green light to the proposed merger of BPAY, eftpos and NPPA.
“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,” ACCC chair Rod Sims said.
Announced in December last year, the merger will see three players within Australia’s payments processing landscape become one.
While the payments processing ecosystem is garnering more attention from regulators and legislators in recent years, the ACCC found that there was little overlap between the three companies “because their core payment services are for different uses and are largely complementary”.
After investigating potential impacts on competition and concerns raised by industry participants, the ACCC found that, at a high level, the services of the three companies do not closely compete.
Mr Sims admitted that “the merger will likely soften competition to some extent between BPAY, eftpos and NPPA in certain areas where they were looking to expand beyond their core offerings or competing to bring new services to market”.
“However, this is unlikely to result in a substantial lessening of competition because strong competitors will remain, including Visa and Mastercard,” he explained.
In addition to the minimal impacts on competition, the ACCC noted that the merger parties have committed to supporting the availability and promotion of least-cost routing (LCR).
This practice allows merchants to reduce their payment processing fees by choosing the payment scheme that processes transactions in the most cost-effective route whenever consumers use a dual-network debit card.
The regulator noted that the Reserve Bank of Australia would oversee this commitment to supporting LCR.
“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,” Mr Sims noted.
The merger approval also requires eftpos and NPPA to develop and make available a set of services within agreed time frames, such as fraud prevention measures, support for online and in-app payments via eftpos debit cards and the development of an industry-wide standard for payment with QR codes by the end of June 2022.
Over the medium to long term, the ACCC said it expects the public to benefit from the merger via the improved and consolidated services the new entity would provide.
“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,” Mr Sims said.
The regulator predicted this merger will push the three payment schemes to co-ordinate investment and reduce inefficient and duplicative spending, passing the savings to customers and businesses.
“Importantly, this will increase the likelihood of the major banks and other shareholders investing in domestic payment services,” he noted.
About the author
About the author
Economy
Growing optimism as lockdowns wind down and the NSW economy revs up
Consumer confidence has gone up for the sixth week in a row. ...Read more
Economy
Hiring practices are only the start for businesses looking to build diversity
The hiring process is becoming more diverse, but many Australian businesses remain mixed on internal inclusion efforts. ...Read more
Economy
NSW residents to receive $50 ‘stay and rediscover’ voucher
NSW residents will receive a $50 accommodation voucher to spend on accommodation anywhere in the state as the NSW government moves towards kick-starting the economy back into gear. ...Read more
Economy
Barbers weren’t the only big winners as NSW leaves lockdown
NSW’s hairdressers, luggage stores and massage parlours are said to be the biggest beneficiaries of pent-up demand so far. ...Read more
Economy
What do ‘inevitable’ cyber threats mean for investors and consumers?
Saying a major cyber attack on Australia’s financial system will happen is easy, but calculating the costs is hard. ...Read more
Economy
NSW to commence quarantine-free international travel on 1 November
New South Wales will open its gates to the world on 1 November. ...Read more
Economy
‘Skilled migrants are key for future economic growth’: Frydenberg
Projections about the size of the Australian economy are set to be redrafted, with the country now very unlikely to meet population growth targets tailored prior to the pandemic. ...Read more
Economy
Jobless rate rises to 4.6%
Employment fell by 138,000 during September following large drops in Victoria and NSW. ...Read more
How the post-lockdown period will influence property, what the soaring NFT market means, and defining financial wellness
Listen now
APRA’s mortgage crackdown, the power of DeFi and last-minute tax tips
Listen now
What to expect as the end of lockdown looms? Will the Stage 2 tax cuts boost your tax return? Where should investors be looking as the economy reopens?
Listen now
Could property prices inflate by another 20%? What’s happening in recent dividend announcements? Did your fund fail the YFYS test?
Listen now
RBA says BNPL 'no surcharge' rules distort competition
Read more
Australia’s banks may be more vulnerable to cyber attacks than you think
Read more
Investors are more open to net zero but less savvy on the risks
Read more
The more time I spend looking at my money, the further I feel from financial freedom
Read more
Economy
Growing optimism as lockdowns wind down and the NSW economy revs up
Consumer confidence has gone up for the sixth week in a row. ...Read more
Economy
Hiring practices are only the start for businesses looking to build diversity
The hiring process is becoming more diverse, but many Australian businesses remain mixed on internal inclusion efforts. ...Read more
Economy
NSW residents to receive $50 ‘stay and rediscover’ voucher
NSW residents will receive a $50 accommodation voucher to spend on accommodation anywhere in the state as the NSW government moves towards kick-starting the economy back into gear. ...Read more
Economy
Barbers weren’t the only big winners as NSW leaves lockdown
NSW’s hairdressers, luggage stores and massage parlours are said to be the biggest beneficiaries of pent-up demand so far. ...Read more
Economy
What do ‘inevitable’ cyber threats mean for investors and consumers?
Saying a major cyber attack on Australia’s financial system will happen is easy, but calculating the costs is hard. ...Read more
Economy
NSW to commence quarantine-free international travel on 1 November
New South Wales will open its gates to the world on 1 November. ...Read more
Economy
‘Skilled migrants are key for future economic growth’: Frydenberg
Projections about the size of the Australian economy are set to be redrafted, with the country now very unlikely to meet population growth targets tailored prior to the pandemic. ...Read more
Economy
Jobless rate rises to 4.6%
Employment fell by 138,000 during September following large drops in Victoria and NSW. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
