eftpos, BPAY and NPP agree to merge

Australia’s three payments infrastructure providers have agreed to merge as a single entity in a bid to reduce costs and better compete with the growing number of overseas payment platforms.

eftpos, BPAY and NPP Australia (NPPA) announced their intention to amalgamate, pending further consultation and approval by the Australian Competition and Consumer Commission.

It follows months of consultation that began after the release of an issues paper that set the scene for the Reserve Bank of Australia’s root-and-branch review of the payments system.

“In Australia, international card schemes and multinational technology providers are dominating the payments sector,” the trio said in a statement.

“Change is needed to ensure that the Australian payments system supports the best interests of consumers and businesses, through increased choice and competition.”

The merger, which also comes amid a government-initiated review of the payments system, will see the creation of an entity, tentatively dubbed ‘NewCo’, with a single board governing its operations.

NewCo is expected to provide a “multi-service infrastructure” and a unified roadmap that is responsive to change, while continuing the ethos of “low cost of acceptance”.

However, under the proposed structure, eftpos, BPAY and NPPA will continue to be “preserved as distinct operations”, each with their own “operating governance and management schemes”.

Source: eftpos, BPAY, NPP

NewCo’s board – which will ultimately determine the entity’s management structure – is expected to consist of 13 directors, including nine from the major banks, smaller banks and non-ADIs [authorised deposit-taking institutions].

Under this structure, the voting powers of the big four banks will be limited to “four out of 13 votes” – a key aspect of the unanimous agreement between the three payment infrastructure providers.

“While arrangements could evolve over time with the approval of the shareholders, a key feature of the proposal is that the individual interests of the three entities will be protected,” they said.

“Fundamental decisions about the operation, funding, or future of any of the three schemes would be subject to determination by those shareholders that use that particular system.

“Retailers and other users of the eftpos system, for instance, will retain specific veto rights over any proposals that would directly impact eftpos," they said.

The proposal also “requires that each organisation’s existing payments-related work program remains unchanged until at least June 2022”, meaning eftpos’ rollout of online capabilities will continue.

Australian Payments Council chairman Robert Milliner said the new entity was needed to ensure “an efficient, innovative and competitive” domestic payments system for consumers and businesses.

“The model proposed will enable us to adopt faster to the changing trends of the digital economy, while preserving and strengthening the components of our payments system that so many Australia value and rely on,” he said.

“eftpos, BPAY Group and the NPPA provide Australians with reliable, safe and affordable payments options every single day.

“Working towards common goals, they can unlock incredible value, invest more in innovation and realise cost-savings that will ultimately benefit the Australian public.”

eftpos, BPAY and the NPPA are expected to file a formal authorisation application with the ACCC in March 2021 that provides full details of the proposal and rationale.