The $190 million sale of electronic payments provider Paymark to French multinational Ingenico is in doubt after the Commerce Commerce said it was concerned the deal could reduce competition.

Paymark is owned by the four main banks – ANZ, Westpac, ASB and BNZ – and provides processing services connecting electronic payment terminals between retailers and banks.

Its acquisition by Ingenico, a major supplier of payment terminals, was announced in January and in April the French company sought Commerce Commission clearance.

The competition regulator today issued a Letter of Issues setting out its initial view that Paymark’s ownership by Ingenico was anti-competitive.

“At this stage, we are not satisfied that the merger would not give the merged entity the ability and incentive to foreclose rival terminal suppliers, harming competition for merchants seeking terminals or those seeking a solution that integrates a terminal and a digital payment service (for online card payments),” it said.

The commission asked Ingenico for submissions and evidence in relation to its concerns by July 25.

Submissions made public on Ingenico’s application so far include several strongly opposed to the deal from competitors Verifone and Payment Express, as well as retail giant Progressive Enterprises, operator of the Countdown supermarket chain.

The commission’s Letter of Issues echoed their concerns, saying Paymark’s dominance of eftpos transactions at wholesale level could be combined with Ingenico’s terminals supply to stifle competition in the terminals market.

Although Ingenico claimed Paymark’s dominance in eftpos was mitigated by competition from Verifone and Payment Express in contactless and credit card transactions, the commission said those were unlikely to be a substitute that could adequately restrain the dominance of the merged players.

Competitors were also concerned the banks had agreed terms with Paymark committing them to certain transaction volumes, limiting the banks’ incentives to support competing processors.

The commission said it considered that if the Ingenico deal did not proceed it was likely that Paymark could continue in its present ownership or be sold to another buyer.

For the year to March 2017 Paymark reported a net profit of $21 million from revenue of$73.8m.

The company declared a dividend to its owners of $16m.

US-owned Verifone reported a net profit in New Zealand of $1.4m from revenue of $59.3m for the year to October.

Payment Express is owned by Auckland businessman Andy Cullen and does not report results publicly.