Analysis: ACCC and the NSW fare system

George Lekakis Payments, mobile & wallets
NSW Transport and Roads Minister Andrew Constance.
NSW Transport and Roads Minister Andrew Constance.

The NSW Government’s handling of the rollout of Sydney’s new contactless fare collection system warrants urgent and meticulous scrutiny by the Australian Competition and Consumer Commission.

Conflicting statements from the office of NSW transport minister Andrew Constance and Cubic - the company that developed the new system - raise questions as to whether the government is serious about meeting its obligations under national competition agreements and laws.

Millions of Australians relying on Eftpos-enabled debit cards are locked out of the new contactless payments service, whereas commuters with Visa, Mastercard and Amex cards are dialled in.

The convenience that contactless payments now offers public transport users in Sydney should not be underestimated.

Waiting in a queue to load a transport card is a major inconvenience for many, and so there is now an incentive for commuters to bin their Eftpos debit cards and embrace those payments products that work on the new system.

Constance needs to explain why Eftpos – a staple of the Australian payments system - is not embedded in the Sydney transport payments platform.

He also needs to clarify what efforts were made over the last two years by his government to bring Eftpos on board and whether there is still a target date for achieving it.

The problem for the minister and the NSW government is that his rhetoric about open access looks disingenuous given that Cubic now says its work is complete.

Is this supposed to mean that Eftpos’ integration into the Sydney transport payments system was not part of the brief given by the government to Cubic?

If so, then how does the NSW government expect to enhance competition on its contactless platform?

Governments should always take steps to avoid gifting first mover advantages in the financial services industry.

In this case, the Berejiklian government appears to have sidelined the only Australian-owned payments scheme that can compete effectively against the likes of Visa and Mastercard.

In doing so it has denied commuters access to the scheme which, according to RBA’s Payments System Board, levies the lowest average fees on debit transactions in Australia.

The marooning of Eftpos in the Sydney contactless rollout follows a similar outcome in Vancouver last year where Cubic was also mandated to develop a contactless transaction platform for that city’s transit network.

While Visa and Mastercard secured access in Vancouver from the first day of contactless fare collection in 2018, Interac – Canada’s national debit scheme – is still not part of the system.

Cubic yesterday asserted that the new payments system in Sydney would create “frictionless” end-to-end journeys for commuters that would lead to a “transport nirvana”.

However, the system in its current form seems readied for friction that might require a regulatory remedy.