Verifone seeks Commerce Commission clearance to scoop up Smartpay

Tuesday, 4 February 2020

US company Verifone is one of four major suppliers of Eftpos terminals in New Zealand.

One of New Zealand's key providers of Eftpos terminals is seeking competition clearance to buy out a local rival.

Verifone, the US-based owner of electronic payment firm EftPos NZ, has asked the Commerce Commission for permission to buy the New Zealand business of Smartpay NZ for $70 million.

Verifone needs approval for the deal because the similarity of their businesses could lessen competition in the market.

Smartpay's share price rose more than 22 per cent last week, prompting a 'please explain' enquiry from the NZX, but the company denied breaching the exchange's disclosure rules.

More and more of us are ditching the cash and using Eftpos or our credit and debit cards for transactions.

* Higher prices for all as retailers hit by credit and debit card costs: Retail NZ**

Smartpay told shareholders about the Verifone purchase last November, saying it would allow the company to grow its Australian business, which is excluded from the deal.

The deal also excludes Smartpay's retail radio business and assets in Australia and New Zealand, and its Alipay and WeChat Pay business in both countries.

Four players dominate the country's payment terminals market to retailers and resellers: Verifone which owns Eftpos New Zealand, Smartpay, Ingenico (Paymark's owner) and Windcave.

Retail New Zealand spokesman Greg Harford said the merger of two terminal providers was unlikely to have any effect on the retail sector's big bugbear, the cost of processing people's purchases.

But it could have an effect on the terminal market, which was fairly competitive at present. Many retailers paid a fee to lease their terminals rather than buy them outright.

'We don't hear too much noise about the terminal costs. The bigger issue for our member retailers is around the cost of merchant fees, the processing fee charged by the bank.'

Card payments at the counter continues to grow, with Kiwis making 358 card transactions per person in 2018, almost one a day, and up more than 4 per cent on the previous year.

Non-card payments via watches or mobile phones were less widespread and contactless cards like Paywave were still finding their niche, Harford said.

Smartpay is growing in Australia, with total revenue up 32 per cent to $13.42m in the six months to September 30, but it made a loss of $576,000.

Nevertheless, the company said its Australian acquiring terminal fleet now stood at 4,000 self acquired terminals, up from 1,500 a year earlier.

'We are now processing over $1b of EFTPOS transactions on an annualised basis,' the company said.

Shares in Smartpay opened at 64c this morning, having risen just over 200 per cent in the last year.