The planned amalgamation of BPAY, eftpos and the New Payments Platform has fallen foul of the ACCC in its Statement of Preliminary Views, released on Friday, with questions over future investment roadmaps and contestability.

In March, March 2021 Industry Committee Administration Pty Ltd lodged an application for the merger authorisation, in line with a scheme first outlined in late 2020.

The ACCC said it was “not satisfied that the proposed amalgamation will not result in a substantial lessening of competition in a market or markets relating to payments services or infrastructure”.

And in a nod to one of the warmest controversies in payments in Australia, the ACCC said it was “assessing concerns raised by interested parties that the Least Cost Routing initiative may be neglected or abandoned … and that this would reduce competition”.

Matters of ownership and governance and the degree of influence of the major banks are highlighted in the ACCC’s analysis.

The nature of future investment roadmaps, and in particular whether the new payments company “will have the ability and incentive to directly or indirectly remove or diminish eftpos’ capability following the proposed amalgamation, and whether this is likely to have the effect of substantially lessening competition” features in the analysis.

“Several submissions raised concerns regarding eftpos’ level of strategic independence following the proposed amalgamation,” the ACCC said.

These concerns are that “eftpos will lose its ability to control its own roadmap; a lack of certainty regarding eftpos’ future roadmap beyond the short term; and that eftpos transaction volumes could be shifted to the NPP, inhibiting eftpos’ ability to innovate”.

Questions of access are also prominent.

Following the proposed amalgamation, “NewCo would control key payments infrastructure to which third party providers may seek access to provide payment services in Australia,” the ACCC said.

“Foreclosure of access to this infrastructure could result in higher barriers to entry, less innovation and less competition for payments services.

“The ACCC is considering whether combining NPPA’s infrastructure with BPAY and eftpos, which operate in downstream markets (in particular in relation to BPAY, whose Osko service is an overlay on the NPP infrastructure), could result in NewCo having the ability and incentive to foreclose competition and reduce innovation in competing payments services that rely on the NPP infrastructure.”