CCPC requires binding commitments to clear establishment of new mobile payments service by banks

June 16, 2022

The Competition and Consumer Protection Commission (CCPC) has cleared, subject to a number of legally binding commitments, the proposed transaction whereby Allied Irish Banks P.L.C., the Governor and Company of the Bank of Ireland, Permanent TSB P.L.C. and KBC Bank Ireland P.L.C. will establish a joint venture company, Synch Payments DAC (Synch), to provide a new mobile payments service (M/21/004).

The mobile payments service will be available to customers of banks and other financial institutions participating in Synch. This may include the banks who are the founding shareholders of Synch as well as other banks or financial institutions who decide to join the Synch mobile payments service. Through its smartphone app, Synch will facilitate: (i) instant person-to-person payments; and, (ii) instant person-to-business payments services which can be used by online merchants on their websites, or in retail outlets through the use of QR codes, to allow consumers to pay for goods and services. Similar types of mobile payments services are already available in many other countries in the European Union.

Following notification to the CCPC in April 2021, the CCPC carried out a preliminary investigation of the proposed joint venture and concluded that a full investigation was required to establish if it could lead to a substantial lessening of competition in the State.

The CCPC’s full investigation identified a number of preliminary competition concerns. The CCPC’s preliminary concerns notably included the following:

  • First, the CCPC was concerned that, given that the founding shareholders represent a large combined share of the Irish banking sector, the joint venture could be a means of foreclosing potential new competitors from entering the market for the provision of banking products and services, for example by denying or delaying access to a licence to participate in the mobile payments service.
  • Second, the CCPC was concerned that the establishment of Synch could lead to the stifling of innovation in mobile payments services, either through the ability of the founding shareholders to influence decisions regarding future innovation within Synch itself or through a reduced incentive to develop other services.

In response to the CCPC’s preliminary competition concerns, the parties proposed to make a number of binding commitments to the CCPC. The key commitments that have been agreed include the following:

  • Synch has set out objective eligibility criteria for any banks or other financial institutions that wish to become participants in the Synch mobile payments service. Synch has also set out defined timelines for processing new applications by prospective licensees.
  • Synch will in due course also allow for interoperability by providing access to a software development kit (SDK) component which will allow licensees to embed certain mobile payments functionalities within their own apps.

In addition, the parties have agreed to put in place:

  • a governance structure including independent board members, which will allow Synch to operate with a greater level of independence from the founding shareholders; and
  • substantial safeguards to prevent the exchange or disclosure of commercially sensitive information.

Finally, Synch and the founding shareholders will be required to report to the CCPC on their compliance with the commitments on an annual basis.

Following detailed consideration and further analysis and, having taken into account the above commitments given by the parties, the CCPC has determined that the result of the proposed transaction will not be to substantially lessen competition and, therefore, that the joint venture can be put into effect.

The CCPC will publish its full determination on its website no later than 60 working days after the date of the determination and after allowing the parties the opportunity to request that confidential information be removed from the published version.

For more information, read the merger determination and the commitments.

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