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.
RELATED ARTICLES
About the author
About the author
Economy
Australian and Korean leaders meet to unlock billions in new trade opportunities
In a significant effort to bolster economic ties and explore new avenues for investment, Australian and Korean leaders, alongside business executives and government officials, are gathering in Seoul ...Read more
Economy
Australia’s growth beat is real — but it’s the wrong kind for capacity
Australia’s economy outpaced forecasts in the June quarter as households opened wallets and government spending did the heavy lifting, even as public investment sagged. The signal for boardrooms: ...Read more
Economy
Australia’s growth is back—but it’s the wrong kind of strong
GDP surprised on the upside in the June quarter, powered by households and government outlays even as public investment slumped. The Reserve Bank stayed hawkish, signalling that sticky services ...Read more
Economy
Australia's Economic Resilience: Strong GDP growth challenges RBA's policy stance
In a surprising turn of events, Australia's economy has shown greater resilience than anticipated, with the latest Q2 GDP report revealing a stronger performance largely driven by vigorous household ...Read more
Economy
Economist calls for July RBA rate cut following inflation data
An economist from State Street Global Advisors has called for the Reserve Bank of Australia to cut interest rates in July following today's Consumer Price Index data for June. Read more
Economy
GDP data prompts economist to predict faster RBA rate cuts
Australia's latest GDP growth data has come in significantly below expectations, prompting an economist to suggest the Reserve Bank may need to ease monetary policy more aggressively. Read more
Economy
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks. Read more
Economy
RBA may cut rates faster if GDP data disappoints, economists say
The Reserve Bank of Australia may cut interest rates more quickly if next week's GDP data disappoints, economists said following today's consumer price index data for May. Read more
Economy
Australian and Korean leaders meet to unlock billions in new trade opportunities
In a significant effort to bolster economic ties and explore new avenues for investment, Australian and Korean leaders, alongside business executives and government officials, are gathering in Seoul ...Read more
Economy
Australia’s growth beat is real — but it’s the wrong kind for capacity
Australia’s economy outpaced forecasts in the June quarter as households opened wallets and government spending did the heavy lifting, even as public investment sagged. The signal for boardrooms: ...Read more
Economy
Australia’s growth is back—but it’s the wrong kind of strong
GDP surprised on the upside in the June quarter, powered by households and government outlays even as public investment slumped. The Reserve Bank stayed hawkish, signalling that sticky services ...Read more
Economy
Australia's Economic Resilience: Strong GDP growth challenges RBA's policy stance
In a surprising turn of events, Australia's economy has shown greater resilience than anticipated, with the latest Q2 GDP report revealing a stronger performance largely driven by vigorous household ...Read more
Economy
Economist calls for July RBA rate cut following inflation data
An economist from State Street Global Advisors has called for the Reserve Bank of Australia to cut interest rates in July following today's Consumer Price Index data for June. Read more
Economy
GDP data prompts economist to predict faster RBA rate cuts
Australia's latest GDP growth data has come in significantly below expectations, prompting an economist to suggest the Reserve Bank may need to ease monetary policy more aggressively. Read more
Economy
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks. Read more
Economy
RBA may cut rates faster if GDP data disappoints, economists say
The Reserve Bank of Australia may cut interest rates more quickly if next week's GDP data disappoints, economists said following today's consumer price index data for May. Read more
