The process that began in January has now been wrapped up as the Commerce Commission has granted French payments group Ingenico clearance to acquire Paymark. The change will affect the majority of retailers in New Zealand which accept card or digital payments.
Since the $190 million merger between Ingenico and Paymark was proposed in January, the ComCom has been working its way through regulatory consents. It will only grant clearance to mergers if it’s satisfied they won’t have the effect of substantially lessening market competition in New Zealand, and declined a merger between media groups NZME and Fairfax in May for this reason.
Ingenico currently wholesales payments terminals into New Zealand through a network of resellers, and provides digital payment services to merchants through its subsidiary Bambora. It’s headquartered in Paris and employs around 7,500 people.
Paymark currently services all major card issuers and over 140,000 Eftpos terminals via more than 80,000 merchants. Three quarters of all transactions in New Zealand are processed by Paymark’s core switch, which enables transactions by connecting payment terminals with the relevant financial institution.
In considering the Ingenico x Paymark merger, the ComCom focused mainly on whether the combination of Paymark’s switch with Ingenico’s terminal business might reduce competition for the supply of payment terminals.
In July, it sent Ingenico a letter of issuesoutlining that at that point, it was not satisfied regarding competiton. Among other concerns, it queried whether the proposed merger would raise vertical effects, which could increase the post-merger Paymark’s ability to foreclose its rivals. Ingenico has previously argued that the merger does not raise any vertical concerns.
Commission Chair Dr Mark Berry said today that the Commission was satisfied the acquisition would not substantially lessen competition in any of the markets it assessed.
“This is a complex market that is evolving with the introduction of new payment systems technology. On balance, we considered that there were sufficient constraints in the market to ensure that Ingenico is motivated to keep the market for payment terminals attractive to merchants,” Dr Berry says.
“Attempting to prevent or deter access by its terminal competitors to the Paymark switch would risk rivals building their own payment switch or encourage merchants to take up new payment technologies. We concluded that Ingenico would likely be incentivised to seek to maximise the volume of transactions that Paymark processes to avoid this risk.”
The Commission has also concluded the acquisition would not affect competition in the supply of digital payment services.