Tyro Share Price Up With RBA’s Move On Big Four Merchant Fees
At time of writing, the share price of Tyro Payments Ltd [ASX:TYR] is up 5.5%, trading at $4.22.
The Tyro share price is on a strong run at the moment and up more than 50% from its original IPO price of $2.75.
Reports emerged in the AFR today that the RBA is looking at a regulatory change that could strip the Big Four banks of more than a half billion in revenue. The Tyro share price likely got a boost from the news as they have pre-empted the move.
Tyro share price up further on news it is has already adapted to potential RBA change
The Tyro share price got a boost when trading opened today and it got a mention in the AFR article released this morning.
RBA head of payments policy Tony Richards was quoted as saying:
‘What is it about this market that banks have the opportunity to send payments through whichever rails are cheapest – Eftpos in most cases – but are not choosing to do it? Banks could be doing least-cost routing in the background for their merchant customers … It would be simple for them to go to all smaller merchants and tell them they offer the ability to send payments on their behalf through cheaper rails. But no major bank is doing that – none of them are actively going to their smaller customers saying, ‘Here is an opportunity to reduce your payments costs.‘
So it comes down to the Big Four banks’ relationship with merchants — and Tyro made changes to its policy back in 2018 that have benefitted merchants.
Tyro CEO Robbie Cooke said:
‘For us, it made sense – we are about our merchants achieving the most economical transaction cost, so implementing LCR [least-cost routing] is true to what we stand for as a business.’
So it appears yet again, the Big Four are on the back foot as a smaller more nibble opponent moves in on their business.
But what are the prospects for the Tyro share price moving forward?
I suspect after a steep rise and some media hype, a retracement could be on the cards.
This is a fancy way for saying a pullback before a continuing share price rise.
I’ve previously identified that the way forward for Tyro could be its ability to morph from a payment services company into a fintech.
That is, can it continue to grow its loan originations?
It is also worth wrapping your head around why their dividends are under threat here.
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