Don't know how I got looking at APRA website, but I just discovered that Tyro Payments has a banking license (to the extent that it can take debit card transactions but not take money deposits).

They have to meet a requirement of holding >$2mill in Tier 1 capital at all times.

For this privilege, they are in the handful (now becoming much much larger) of companies classified as Authorised deposit taking institutions. Hence they are covered under the Financial Claims Scheme which is a government backed guarantee of up to $250k per account.

https://www.apra.gov.au/list-of-authorised-deposit-taking-institutions-covered-under-financial-claims-scheme

I see payment systems as consisting of 3 separate areas:

1. backend banking/transaction processing
2. physical POS processing
3. non-physical website/social media order taking - now moving into different transaction types such as subscription and BNPL

These three areas have been converging for quite a while.  Examples:

• Shopify - started off at 3, found a solution for 1Square - started off at 3, found their own solution for 1, now moving to 2
• Big four banks - started off at 1 & 2, moved into 3 helping people setup eShops
• POS providers mainly hospitaility based with workflow capabilities - started at 2, bolting on 3 & 1, accelerating into the 3 space in a big way with apps and data analytics offerings
• Paypal - started as 1, now moving to 3 (create your own website)
• Companies like eWay who used to integrate 1 & 3, have now been effectively squeezed out of this space

Thanks jwrostagno27 - I didn't know about hicaps on Tyro.  Now I'll have to investigate hicaps on big four.

I also see Tyro as a stronger competitor for hospitality, basically because their commission rates are more affordable.

Many of the newer payment systems charge 2-4% (I didn't know Square charged 4-6%!)

But banks charge 0.9-1.5% as a general rule for a hospitality business.  Tyro has been known to match rates.  Square/Shopify/Stripe/Fat Zebra etc just doesn't stack up for hospitality where margins are tight and many transactions are under $10.

I don't know, as I type and consider this, I'm more likely to put my bets on a big bank with a forward thinking, creative team.  If they can get their development and infrastructure setup quickly, they can win this race.  Emphasis on the IF.  And that is the problem isn't it? Technology agility.