The payments fintechs behind the biggest landgrab in banking since the 1990's
In just over a decade, payments fintechs have built a 25% market share in the big bank-dominated merchant payment processing sector, an opaque but crucial business.
New players in a business banking sector once dominated by the major banks have lifted their market share from almost nothing to 25% of the market in a little over a decade - a landgrab not seen since non-bank mortgage companies tackled the banks in the 90s.
The sector, merchant acquiring - processing payments for businesses - is tough. Margins are low, technology constantly changing, capital intensive scale critical. It’s so tough the major US banks sold their acquiring divisions decades ago while ANZ and Bendigo & Adelaide Bank have also unloaded their acquiring businesses.
Yet more and more new players are entering the market in Australia, bringing not just new technology but new business models. But the challenge for regulators is these new players are not necessarily lowering costs or increasing transparency for consumers and are probably not driving down total payment costs.
Players like Square - whose snappy small white box terminals are fixtures at farmers’ markets and other micro-businesses - and Zeller, Adyen, Smartpay and a dozen others offer innovative deals, beginning with cheaper, even free, payment terminals through to other banking products and enhanced customer information.
