A plan from the largest retail banks for a new mobile-based payment system for competing services such as Revolut has been given the green light by the Competition and Consumer Protection Commission (CCPC) provided that certain binding commitments are met.
The Synch platform is established through a joint venture of AIB, Bank of Ireland, Permanent TSB and KBC Bank Ireland and will allow immediate person-to-person payments.
It will also facilitate instant payments from person to company for online shopping through websites or in-store through the use of QR codes.
The first proposal two years ago, Synch will be available to customers of banks and other financial institutions participating in the project, including the founding banks and others who choose to join later.
The CCPC said that its first preliminary investigation had concluded that a full investigation was needed to determine whether it could lead to a reduction in competition.
That Phase Two investigation identified some problems, CCPC said, including that given that the founding shareholders have a large combined market share, Synch could be used to block potential new competitors from entering it.
There were also concerns that the establishment of Synch could stifle innovation in mobile payment services, “either through the ability of the founding shareholders to influence decisions on future innovation within Synch itself or through a reduced incentive to develop other services.”
As a result, the CCPC said that the parties have proposed to make binding commitments to the CCPC, including the establishment of objective eligibility criteria for all banks or other financial institutions wishing to become participants.
“Synch has also established defined timelines for processing new applications from potential licensees,” the CCPC said.
“Synch will in due course also enable interoperability by providing access to a software development kit (SDK) component that enables licensees to embed certain mobile payment features into their own apps.”
Synch’s board will also include independent members to allow it to work with a greater degree of independence.
Although “essential safeguards to prevent the exchange or disclosure of commercially sensitive information” have been introduced.
Those involved in Synch must submit a compliance report to the CCPC each year.
“After detailed consideration and further analysis and, taking into account the above commitments of the parties, the CCPC has determined that the outcome of the proposed transaction will not significantly reduce competition and therefore that the joint venture can be placed into force,” it said.
The news has been welcomed by the Synch consortium, which said the decision would allow it to continue with its plans to launch the app.
“Over the past two years, we have all seen the rapid growth of the mobile payments market across the country,” said Inez Cooper, CEO of Synch.
“People have become increasingly comfortable paying for goods and services in stores and restaurants with a simple ‘press’ with their phone. The Synch app provides a safe, immediate and friction – free experience for consumers while ensuring a seamless connection directly to their existing banking provider, deliver efficiency for companies. “
She added that the joint venture has already had great interest from buyers, financial institutions and retailers who want to join.
“Some institutions and organizations will be there day one while others will be added in the weeks and months after launch as we continually grow and develop our proposal,” she said.
“We look forward to licensing many financial institutions, payment service providers, buyers and retailers and to continuously growing the payment ecosystem for the benefit of consumers and businesses in Ireland.”
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