Concern over small business payment systems’ merger

Small-business advocacy groups have come together to voice their concerns over the proposed merger of electronic payment systems NPP Australia, Eftpos and Bpay.

The groups expressed fears that such a merger would pave way for the emergence of a single payments option, leading to a rise in the cost of processing transactions and a diminished competition, both of which could affect small businesses badly.

“As a general rule, whenever the major banks have an agenda to merge entities to streamline processes, alarm bells warning of the impacts on competition should sound,” Australasian Association Convenience Stores (AACS) CEO, Jeff Rogut, said. “Even prior to the pandemic, tap-and-go payment options were increasingly being favoured by consumers. Now, they are overwhelmingly the preferred way for people to make transactions.

“The proposed merger of payment systems which provide the infrastructure for these transactions will have obvious, significant impacts for businesses everywhere,” Rogut added. “But for small businesses like convenience stores, the ramifications could be major. With no competition, there is no mechanism for the market to control price and alleviate cost increases for these businesses at this delicate economic time. Nor is there any impetus to improve the level of customer service provided to both merchants and their tap-and-go customers.”

Rogut warned that the move would result in a further boost in power for the major banks, with the discussions around the proposed merger having taken place largely place behind the back of small business. He called on the ACCC to recognise the anti-competitive impacts of the merger and to, therefore, prevent it from going ahead.

The AACS has previously called on the Government to require the banks to offer all retailers the option of routing tap-and-go transactions through the least costly payments network, because many convenience stores were being forced to use more expensive international networks such as Visa and Mastercard to route tap-and-go transactions, instead of eftpos which would have saved them thousands of dollars each year. The Reserve Bank supported this call and made it clear that merchants should have access to the lowest transaction cost route for tap-and-go payments.

“We believe it is now time for the Reserve Bank to step up once again and insist that all businesses have the choice to process electronic payments through the network they choose to reduce their costs,” Rogut said. “This extends to ensuring there’s competition in the market. The consolidation of payment platforms into a single provider will have the opposite – and dangerous – effect.”

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