Westpac has confirmed it is in “preliminary discussions” to buy payments business Tyro.

Tyro is a big player in the Australian payment market. It offers eftpos solutions, business lending, and Medicare and private health fund claiming and rebating services, and boasted 63,700 Australian merchants as partners at the end of June.

During FY22 the company processed more than $34.2 billion in transaction value, generated $148.5 million in normalised gross profit, originated $99.1 million in loans and held merchant deposits totalling $83.3 million.

While these results were above market estimates, Tyro still suffered when the pandemic shut down services.

Tyro said it would book $5 million in savings in FY23 in a bid to reduce $11 million a year in costs.

Westpac’s interest is in competing in the new payments space, which has seen a number of interlopers enter a now-crowded market.

“An acquisition would strengthen Westpac’s small business proposition, enabling it to better support customers and grow merchant acquiring, particularly in the hospitality and healthcare sectors,” a spokesperson from Westpac told AFR.

Tyro received a A$658 million offer last month from a private equity consortium led by Potentia.