Banks get the all-clear to launch a new app as a rival to Revolut

THE major retail banks have been cleared by the state’s competition watchdog to launch a money-transfer app for rival Revolut.

The synch payment system aims to enable instant person-to-person payments on mobile phones.

It is understood that the payment app will be called Yippay.

AIB, Bank of Ireland, Permanent TSB and KBC Bank Ireland formed Synch Payments and have been trying to get approval from the Competition and Consumer Protection Commission (CCPC) for almost two years.

KBC Bank is a shareholder in the company. His plans to exit the market could result in his stake being replaced by An Post.

The credit unions will likely become part of the new system.

CCPC clearance for the deal is controversial as the major banks already dominate the market. PayPal and Revolut, among others, objected to the banking joint venture.

Conditions were attached to the CCPC’s approval of the deal.

This includes a case where competitors like An Post and credit unions need access to it.

The CCPC said it received firm commitments from the banks that make up Synch in response to preliminary competition concerns.

This includes Synch establishing objective eligibility criteria for banks or other financial institutions wishing to become a participant in Synch’s mobile payment service.

Synch has also set defined deadlines for the processing of new applications by potential licensees.

In addition, the parties have agreed to establish: A governance structure with independent board members, which will allow Synch to operate with a greater degree of independence from the founding shareholders.

Finally, Synch and the founding shareholders are required to report annually to the CCPC on compliance with the commitments.

The new app is coordinated by the Banking and Payments Federation Ireland. Italian company FinTech was chosen to provide the technology behind the service.

Synch aims to provide a payment app that allows those who sign up to send and make payments in real-time.

This is an offer to compete against challenger banks like Revolut, Zumo, Bunq and Germany’s N26. The initial phase will focus on consumer-to-consumer payments.

Retail banks here fear that if challenger banks continue to build market share in payments, they will eventually have a ready customer base for future lending and other financial products.

Co-founder and banking app Revolut Vlad Yatsenko said in Dublin this month the company has nearly two million customers in Ireland.

Questions have been raised as to whether the synch payment scheme is anti-competitive and whether allowing it will discourage new entrants.

The Electronic Money Association, whose members include the fast-growing Stripe and the payment giant PayPal, submitted an objection to the Competition Commission.

Other members of the Electronic Money Association include Amex, Facebook Payments, Revolut and Google Payments.

Synch Payments Managing Director Inez Cooper welcomed the contest’s endorsement.

“Today’s approval is just the beginning. We already have a lot of interest from acquirers, financial institutions and retailers who want to join our open platform.”

She said last year the system would open up to all banks and payment providers.

“It is an open ecosystem that we are planning. We are happy when others come on board.”

Synch could now be rolled out for person-to-person payments by the end of the year after receiving CCPC approval.