Major retail banks have been cleared by the state’s competition watchdog to set up a money transfer app to rival Revolut.
The Synch payment system aims to enable instant person-to-person payments on mobile phones.
It is understood that the payment application will be called Yippay.
AIB, Bank of Ireland, Permanent TSB and KBC Bank Ireland set up Synch Payments and had been seeking approval from the Competition and Consumer Protection Commission (CCPC) for almost two years now.
KBC Bank is a shareholder in the company. Its intention to leave the market could see its shareholding replaced by An Post.
Credit unions will likely be part of the new system.
CCPC’s clearance for the deal is controversial as major banks are already dominant in this market. Objections to the banking joint venture have been filed by companies like PayPal and Revolut.
Conditions were attached to the CCPC approving the deal.
These include an instance that competitors like An Post and credit unions must have access to.
The CCPC said that in response to preliminary competition concerns, it had obtained binding commitments from the banks that form Synch.
These require Synch to define objective eligibility criteria for all banks or other financial institutions that wish to become participants in Synch’s mobile payment service.
Synch has also established defined timelines for the processing of new applications by potential licensees.
In addition, the parties have agreed to put in place: a governance structure including independent directors, which will allow Synch to operate with a greater level of independence from the founding shareholders.
Finally, Synch and the founding shareholders will be required to report annually to the CCPC on their compliance with the commitments.
The new app is coordinated by the Banking and Payments Federation Ireland. The Italian FinTech company has been selected to provide the technology behind the service.
Synch aims to provide a payment application that will allow those who register to send and make payments in real time.
This is an offer to face challenger banks such as Revolut, Zumo, Bunq and the German N26. The initial phase should focus on consumer-to-consumer payments.
Retail banks here fear that if challenger banks continue to accumulate market share in payments, they will eventually have a ready customer base for future loans and other financial products.
Revolut co-founder and banking app Vlad Yatsenko said in Dublin this month that the company has almost two million customers in Ireland.
Questions have been raised about whether the Synch payment system is anti-competitive and whether allowing it will discourage new entrants to this market.
The Electronic Money Association, whose members include growing Stripe and payment giant PayPal, filed an objection to the competition commission here.
Other members of the Electronic Money Association include Amex, Facebook Payments, Revolut, and Google Payments.
Synch Payments Managing Director Inez Cooper welcomed the approval of the contest.
“Today’s approval is just the beginning. We have already generated a lot of interest from acquirers, financial institutions and retailers who want to join our open platform. »
She said last year that the system would be open to all banks and payment providers.
“It is an open ecosystem that we are planning. We will appreciate that others join us.
Synch could now be launched by the end of the year for person-to-person payments after obtaining approval from the CCPC.