Thursday 12th July 2018
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The Commerce Commission has indicated it has concerns with French payments systems provider Ingenico's planned acquisition of Paymark, as it might substantially lessen competition.
The regulator has published a letter of issues sent to Ingenico outlining concerns a merged entity might have the "ability and incentive to foreclose rival terminal suppliers, harming competition for merchants seeking terminals or those seeking a solution that integrates a terminal and a digital payment service (for online card payments)."
Paris-based Ingenico wants to pay $190 million for Paymark, which operates more than three-quarters of New Zealand's EFTPOS terminals, ending a two-year sales process run by owners ANZ Bank New Zealand, ASB Bank, Bank of New Zealand and Westpac New Zealand. As part of the deal, New Zealand's big four banks will keep their existing services agreement with Paymark, and Ingenico signalled plans to integrate its old terminal assets with Paymark and Bambora in the broader Pacific region offering point-of-sale and terminal management, in-store and online processing capabilities, and analytics and loyalty services.
The commission said it's currently testing whether the merged entity would make it harder or more expensive for rivals to compete for the supply of terminals. "Without the merger, there would not be the same ability or incentive to foreclose rivals competing to supply payment solutions because Paymark does not currently supply terminals," the regulator said.
Other switch operators, such as Verifone and Payment Express, could face greater barriers to compete with Paymark for switching services as a result of the acquisition, the commission said. It said Verifone doesn't have the same capability as Paymark to process transactions, as the only issuer it has links with is ANZ Bank, and Payment Express relies on Verifone to process some transactions for it. Verifone could build links to other issuers, increasing competition, but the threat of that isn't significant enough to impose a significant constraint on Paymark, the commission said.
Ingenico and other interested parties have until July 25 to make a submission on the letter, which the commission said "is not a final decision and does not mean that the commission intends to decline to clear a merger." The acquisition is also subject to Overseas Investment Office approval.
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