Merger of Rapyd and Valitor approved with conditions

The Icelandic Competition
Authority („ICA“) has completed its investigation into the
acquisition of Rapyd Financial Network (2016) Ltd. („Rapyd“) of all
shares in Valitor hf. („Valitor“). Rapyd’s subsidiary is Rapyd Europe
hf., formerly known as Korta hf. The company is engaged in payment services in
Iceland like Valitor. Rapyd intends to merge the operations of Valitor and
Rapyd Europe hf.

The merger primarily affects the
markets for merchant acquiring in Iceland, i.e., acquiring at point of sale
(regardless of settlement currency) and E-commerce merchant acquiring with
settlement in ISK.

Negotiations to settle the case
with conditions aimed at eliminating the merger’s detrimental effects on
competition have led to a settlement where Rapyd commits to specific
countermeasures. The commitments include inter alia that Rapyd undertakes to
sell a diversified set of merchant contracts to a qualified buyer that
corresponds to a greater share of the relevant market than the market share of
Rapyd Europe hf. The settlement contains detailed conditions that ensure that
the set of merchant contracts is diverse, among other things, in terms of
merchants’ size and industry classification. At the same time, the conditions
are intended to prevent inconvenience to customers (merchants), but their right
to choose a provider of merchant acquiring services will not be infringed.

The buyer of the merchant
contracts is Kvika banki hf. („Kvika“), which will enter the market
for merchant acquiring with the acquisition of the merchant contracts. Given
the services provided by the merged company to Kvika for a limited period,
consisting primarily of technical implementation and settlement with the
international card schemes, Rapyd has committed to establishing a certain
separation within the merged company to prevent it can exploit
business-sensitive information about Kvika’s operations. Moreover, Rapyd may
not repurchase the sold merchant contracts for ten years and may not compete
for business with the merchants in the traded merchant contracts for a certain
period after Kvika’s temporary service purchases come to an end.

To ensure that the settlement has
the intended impact, the ICA also required Kvika to agree to certain
commitments in a separate settlement with the ICA, where Kvika undertakes inter
alia to transfer the aforementioned temporary service purchases before certain
deadlines from the merged company to another service provider that is not a
significant player in the market for merchant acquiring in Iceland. This is
important to ensure Kvika’s lasting competitive independence from the merged
company.

You can reach the decision, in Icelandic, here.