ACCC authorises payment systems merger after undertaking

NATIONAL

Each consumer debit card transaction comes at a significant cost unless you as a business can access the eftpos payment gateway which is 40% cheaper to transact. Eftpos is accessible via a least cost routing system.

MGA TMA members have found this a frustrating issue to deal with as the big four banks claim ignorance when a member requests Least Cost Routing for their business.

MGA TMA was concerned with a proposed merger between three payment platforms that could have risked the survival of eftpos and its current and future plans to provide a cheaper alternative for debit card payments to VISA and Mastercard.

After a number of consultations and MGA TMA submissions, on 9 September 2021, the ACCC authorised the proposed merger of BPAY Group Holding Pty Ltd and its subsidiaries (together, BPAY), eftpos Payments Australia Ltd (eftpos) and NPP Australia Ltd (NPPA), after accepting a court-enforceable undertaking offered by the parties.

BPAY, eftpos and NPPA each provide payment services to consumers and businesses through their respective payment systems, BPAY, eftpos and the New Payments Platform.

“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. “The ACCC found that, at a high level, the services of the three companies do not compete closely. We considered a number of potential impacts on competition, including concerns raised by industry participants about the impact of the amalgamation 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,” Mr Sims said.

“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 ACCC recognises that rapid change is taking place in the sector, but ultimately it was satisfied that, with the undertaking, the amalgamation will not have a significant adverse impact on eftpos’ services or the availability of least cost routing,” Mr Sims said.

“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.”

“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,” Mr Sims said.

In the undertaking accepted by the ACCC, the merger parties have committed to ensure that, for a term of four years, eftpos will do everything in its control to make least cost routing available and promote it, to ensure the eftpos payments scheme, and the eftpos card-based issuing and acceptance infrastructure and services are maintained.

The undertaking also requires the merger parties to ensure that eftpos and NPPA develop and make available a set of Prescribed Services within agreed timeframes.

These Prescribed Services include fraud prevention measures, and technical developments that will allow online and in-app payments to be made using eftpos debit cards.

The merger parties have also committed to ensuring that BPAY, eftpos and NPPA agree an industry wide standard supporting payment with QR codes by the end of June 2022. This will be in coordination with Australian Payments Network Limited, Australia’s self-regulatory body and industry association for payments.

“We accepted the undertaking because we consider it will help ensure that eftpos will develop and improve its debitbased payment services for point of sale, online and in-app payments,” Mr Sims said.

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 ACCC found that competition between the payment services of eftpos, BPAY and NPPA 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,” Mr Sims said.

ACCC Chair Rod Sims appointed to International Competition Network Role

On 17 September 2021, ACCC Chair, Rod Sims, was confirmed by the steering group of the International Competition Network (ICN) as the new Vice Chair Digital Co-ordination and Asia-Pacific Liaison.

Rod Sims will focus on co-ordinating ICN projects and discussions about competition in the digital economy and will also act as a liaison between the ICN Steering Group and ICN members in the Asia-Pacific region.

“I am very pleased to take on this role. Competition regulators are increasingly dealing with global issues that require global responses, underscoring the importance of the ICN’s work,” Mr Sims said.

“Competition authorities around the world have much to discuss and learn from each other as we continue to face the challenges posed by the need to promote competition and good consumer outcomes in many areas of the digital economy.”

Mr Sims will work closely with ICN Chair Andreas Mundt, the President of the German Cartel Office (Bundeskartellamt), together with the ICN’s other Vice Chair, Tembinkosi Bonakele, Commissioner of the South African Competition Commission.

Background

The ICN is a consensus-based organisation of national and multinational competition law enforcement authorities. It creates opportunities for authorities to work collaboratively to consider and address competition enforcement and policy issues.

Australia was a founding member of ICN in 2001 together with thirteen other jurisdictions –Canada, European Union, France, Germany, Israel, Italy, Japan, Korea, Mexico, South Africa, United Kingdom, United States, and Zambia. The ICN now has over one hundred and twenty member agencies.

Notes

Least cost routing refers to the ability for merchants to choose whether payments made using eftpos/Visa or eftpos/Mastercard denominated dual network debit cards, are processed by eftpos; or by Visa or

Mastercard, which affects the fees a merchant has to pay.