A statement on Tuesday, from an Industry Committee comprising 13 mutual shareholders and eftpos members across the three organisations, said the proposal had been put forward after the RBA published a paper titled Review of Retail Payments Regulation Issues.
It pointed to the fact that international card schemes and multinational providers were dominating the Australian payments sector and change was needed to ensure the local sector supported consumers by providing an additional local choice.
The amalgamated entity is intended to have a single board with 13 directors and seek to build on the strengths of each organisation: "BPAY Group's innovation capability, eftpos' low-cost, real-time retail payments and digital innovation capability and NPPA's real-time infrastructure management capability".
The boards of the three organisations have drawn up an agreement to form NewCo, provided they receive approval from the Australian Competition and Consumer Commission.
The proposal also seeks to have each organisation retain its existing payments-related work program until at least June 2022. A formal notice will be sent to the ACCC in March 2021 and made public, with consultation sought. The ACCC will have 90 days to decide on the proposal.
Industry Committee chairman Robert Milliner said: "An efficient, innovative and competitive Australian payments system is vital for consumers and businesses, both large and small.
"The model proposed will enable us to adapt faster to the changing trends of the digital economy, while preserving and strengthening the components of our payments system that so many Australians value and rely on.
"eftpos, BPAY Group and the NPPA provide Australians with reliable, safe and affordable payments options every single day.
"Working together towards common goals, they can unlock incredible value, invest more in innovation and realise cost-savings that will ultimately benefit the Australian public."
eftpos managing director Stephen Benton said: "For over 35 years, eftpos has been giving Australian customers and businesses access to reliable, affordable and safe payments. We pride ourselves on offering customers low-cost acceptance options and intend to continue to deliver this.
"This proposal should allow us to continue to expand our online digital capabilities and innovation in areas such as digital identity, QR codes and mobile wallets including extending the role of Beem It to be an everyday lifestyle app."
BPAY Group chief executive John Banfield said: "BPAY Group has been at the forefront of collaborative innovation within the financial services sector and beyond for decades. Our more recent recognition as one of Australia's Best Workplaces, AFR's Most Innovative Companies, Best Product Innovation is a clear strategic advantage for the board of NewCo as it transforms into an entity that can literally take on the world, should the ACCC agree that this is in the public's interest or otherwise approve it."
NPP Australia chief executive Adrian Lovney said: "The COVID-19 pandemic has accelerated the pace in which the payments system is evolving. The increasing trends away from cash to online and in-app purchasing highlight how important it is for Australia's domestic payments players to work together and invest in the current and future needs of Australians and how they want to pay."