Australia Considers Consolidation of Payment Infrastructures

Source: Regulation Asia Editors, Regulation Asia 2020-06-08

An industry committee has been set up to explore the benefits of a consolidating the NPP, BPAY and eftpos – Australia’s three payments infrastructures.

NPP Australia’s Board has formed an industry committee to explore the potential consolidation of BPAY, eftpos and NPP (New Payments Platform) into a single entity.

The move follows calls from the RBA (Reserve Bank of Australia) for the platform providers to consider whether alternate structural arrangements might be beneficial to the industry as a whole, pointing to the UK and Singapore as jurisdictions which have undergone similar consolidations of domestic payments infrastructure in recent years.

According to NPP Australia Chair Bob McKinnon, preliminary views from shareholders have indicated that such a merger could deliver more efficient, simpler, and stronger domestic payments infrastructure, as well as better services for consumers and businesses.

Some of the potential benefits that could be achieved include faster delivery of new payments functionality, reduced acceptance costs, better risk management, and more efficient deployment of capital, among others.

These potential benefits have been further emphasised by the Covid-19 pandemic which has accelerated the trend towards digital payments and highlighted the importance of targeted investment, resilient systems, and reduced complexity, McKinnon said in a statement.

Given the level of initial shareholder support, the NPP Australia Board has resolved to form an industry committee to explore whether potential consolidation of BPAY, eftpos and NPP into a single entity might advance the public interest and be in the interest of all stakeholders.

The committee will serve as a structured, independent forum in which the 22 shareholders of the three organisations can continue discussions on the potential consolidation, focusing on issues of ownership, structure, and corporate governance in its deliberations – a process that will be independently chaired and supported by independent resources.

The study is expected to take between six and nine months, including the time needed to obtain the necessary regulatory approvals before any recommendations on potential outcomes are finalised.

Responding to the committee’s formation, eftpos CEO Stephen Benton welcomed the move, saying “any outcomes must be in the public interest, and drive efficiency and effective payment services in the short or long-term.”

Any investigation should look at a range of options which drive the most appropriate and optimum outcomes for end users, including alternatives to consolidation such as collaboration on core infrastructure assets, whereby competition between the three systems would be allowed to continue, Benton said.

“Collaboration may have advantages such as speed to market, reduced investment – both operational and transaction costs – increased resilience and better leveraging of core assets.”

BPAY Group Group CEO John Banfield likewise welcomed the initiative, saying that consolidation or better coordination of Australia’s payments systems has the potential to “make life simpler for businesses, the industry and all Australians.”

“We welcome the opportunity to work collaboratively to assess whether there are benefits on increased consolidation or coordination for the betterment of all.”

Australia Considers Consolidation of Payment Infrastructures

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