Merger of payment software providers raises competition concerns

Oct 7th '19

The Competition and Markets Authority (CMA) has found that payment software firm Bottomline Technologies’ purchase of Experian Payments Gateway (EPG) may reduce competition.

The CMA has been investigating whether the completed merger of Bottomline and the EPG business raises competition concerns.

Both companies provide payments software used by businesses every day to submit direct debits, run payroll and pay suppliers. This directly connects to the UK’s Bankers’ Automated Clearing Services (Bacs) scheme Bacstel-IP service and Faster Payments System Direct Corporate Access (FPS DCA). Bottomline and EPG are 2 leading providers of the software, with Bottomline by far the largest and EPG a trusted supplier to some of the biggest businesses.

After completing its initial Phase 1 investigation, the CMA is concerned that the new, merged company may increase prices, reduce product availability, or reduce its investment in innovation. This is mainly because if Bottomline had not acquired EPG, there would have been a realistic chance that EPG would have been bought by a different firm, which could have resulted in a more competitive market with greater product development and more choice for customers.

Joel Bamford, Senior Director of Mergers at the CMA, said:

Payment software is critical to many businesses in the UK for managing payments including direct debits and paying their staff. Bottomline is already the largest supplier and has purchased a rival who is trusted by many large businesses with few remaining competitors left in the market.

Our investigation has shown that other options for the EPG business were available which could have resulted in more competition in the future. We are therefore concerned this transaction could lead to prices going up or less development of current software.

Bottomline has until 14 October to offer solutions to resolve the CMA’s concerns, otherwise the merger will be referred for an in-depth Phase 2 investigation.

More information can be found on the Bottomline/Experian page.