Bank monopoly over payments looms under proposed consolidation

Jeff Rogut

CEO   AACS

Worrying signs are emerging that Australia’s big banks are moving quietly and quickly to sideline small businesses and independent retailers from having a say over how the nation’s payments rails are run.

In a move that threatens to sharply increase costs for business, a surprise unilateral push to consolidate governance of the New Payments Platform (NPP), BPAY and eftpos under a single board has been floated by the NPP – despite the Reserve Bank of Australia hitting pause on its own consultation process regarding Australia’s payments system.

If successful, the move would create an unassailable new monopoly and massively dilute – if not eliminate – any tangible say that retailers now have over payments pricing, policy and future architecture.

With banks already heavily favouring US credit giants Mastercard and Visa instead of routing contactless transactions over cheaper options like eftpos, rushed consolidation risks killing crucial reforms like Least Cost Routing (LCR) that have forced down interchange and merchant service fees.

Silencing retailers would give banks and credit card schemes a green light to gouge on transaction fees, which retailers already fork out $4 billion a year on. It’s a recipe for falling revenue and fewer jobs for Australian businesses, at a time of make or break for retailers riding out the recession.

But the consolidation push is not a fait accommpli yet.

Just before the Federal Budget, Prime Minister Scott Morrison revealed Treasury will be “reviewing the regulatory architecture applying to the payments system to ensure it remains fit for purpose and is capable of supporting continued innovation for the benefit of both businesses and consumers”.  

This is separate from the RBA review, and means there are now two overlapping payments reviews. They should be allowed to run their course, and the ACCC should also take account of the anti-competitive nature of the merger, and then put a stop to it.

AACS CEO Jeff Rogut said if the merger proceeded it could result in a single domestic payments provider, reducing competition and increasing costs for small businesses like convenience stores.

“This proposed merger is a threat to small business, and we are recommending the ACCC prevents it from proceeding. It’s more important than ever for retailers and small businesses to make themselves heard, and we will continue to lobby on behalf of the Convenience Industry to stop this unwelcome and damaging proposal.”