Cuscal’s Acquisition of Indue Gets Green Light
▼ Summary
– The ACCC will not oppose Cuscal’s acquisition of Indue, finding it unlikely to substantially lessen competition in payment facilitation services.
– The review focused on competition between Cuscal and Indue in serving small banks, mutual banks, and fintech companies with payment solutions.
– Industry consolidation has reduced the number of customers they compete for, and achieving scale helps suppliers invest in technology and meet requirements.
– Customers can source services from multiple suppliers, and many impacted customers supported the acquisition for its efficiencies and innovation benefits.
– Broader industry trends like payment digitization may lower switching costs and reduce barriers to entry, influencing the ACCC’s decision.
Australia’s competition regulator has given its approval for Cuscal Limited to acquire payment services provider Indue Limited, determining the transaction won’t significantly reduce market competition. The Australian Competition and Consumer Commission conducted an extensive review examining how directly Cuscal and Indue compete in providing payment facilitation services, particularly for smaller banks, mutual banks, and financial technology companies.
Payment facilitation services enable organizations like community banks and fintech startups to offer payment solutions to businesses and consumers, including debit card processing and eftpos services. These services form the backbone of modern financial transactions, allowing smaller players to compete effectively in the digital economy.
ACCC Commissioner Dr Philip Williams noted that industry consolidation among smaller financial institutions has naturally reduced the number of customers that Cuscal and Indue directly compete for. “Payment facilitation requires substantial financial investment,” Williams explained. “Achieving greater operational scale helps providers make necessary investments to keep pace with technological advancements and evolving regulatory requirements.”
The commission’s investigation revealed that while both companies offer a more comprehensive range of payment services than most competitors, customers typically have multiple supplier options available. Williams emphasized that “despite Cuscal and Indue being among the larger payment facilitation providers, customers continue to have access to various alternative suppliers across different payment schemes.”
During its review process, the ACCC actively sought feedback from numerous market participants, including thirty small and mutual banking institutions. Many customers potentially affected by the acquisition expressed support for the transaction moving forward. According to Williams, “Since Cuscal and Indue provide critical business functions for their clients, many believe the acquisition will create operational efficiencies and sustain investment in product development and innovation.”
Broader industry trends also influenced the ACCC’s decision, particularly the ongoing digital transformation of payment systems. The increasing digitization of financial transactions may lower switching costs between payment providers and reduce barriers for new market entrants, thereby maintaining competitive pressures.
Payment facilitation encompasses multiple essential services including connections to payment networks like Visa, Mastercard, eftpos and BPAY, BIN sponsorship, card and ATM switching, processing of credit, debit and prepaid cards, along with data management, fraud prevention, and back-office support. Clients of both companies include small to medium-sized banks, credit unions, corporate entities, government agencies issuing payment cards, and fintech companies developing specialized financial products.
The ACCC’s assessment followed the legal standards outlined in section 50 of the Competition and Consumer Act, which prohibits acquisitions likely to substantially lessen competition within any market.
(Source: ITWire Australia)
