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Australia’s four leading banks have had their application to collectively bargain with Apple and boycott the Apple Pay payment service denied by the country’s competition watchdog.
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While the Australia and New Zealand Banking Group already allows its customers to use Apple Pay, the Commonwealth Bank of Australia, Westpac, NAB and Bendigo and Adelaide Bank do not.
The four banks had sought authorisation from the Australian Competition and Consumer Commission (ACCC) to bargain with Apple for access to the near-field communication (NFC) controller in iPhones, and for reasonable access terms to the Apple App Store. This way, the banks could offer their own digital wallets to iPhone users without having to use Apple Pay.
The banks had also argued that Australian iPhone users would only be able to use Apple Pay if they wanted a digital wallet service. This was always going to be a challenge to prove, given Australian consumers have a plethora of digital wallet options already available to them.
In denying the application, ACCC chairman Rod Simms said: “The ACCC is not satisfied, on balance, that the likely benefits from the proposed conduct outweigh the likely detriments. We are concerned that the proposed conduct is likely to reduce or distort competition in a number of markets.”
The ACCC accepted that it would have boosted competition in mobile payments if Apple provided the banks with access to the iPhone’s NFC controller. However, this could also diminish Apple’s ability to compete with Google’s competing Android Pay service that is gaining traction in Australia, it added.
With the anticipated arrival of the first phase of Australia’s New Payments Platform (NPP), which will be operational in the second half of 2017, more payments competition is expected. Bill payment service BPay will be the first overlay service when the NPP launches, but it will not be alone for long.
In a recent speech, Leila Fourie, CEO of the Australian Payments Clearing Authority, noted the importance of the NPP and the dawn of real-time payments. She suggested blockchain-based payments could enter the mainstream, a further challenge to conventional digital wallets.
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Fourie indicated that cash is already under siege, noting that ATM withdrawals dropped 6.6% by volume and 2.4% by value in the last 12 months. Meanwhile, card transactions increased by more than 12%.
She also noted that a number of technology players other than Apple, such as Facebook, Amazon and Google, have been working on payment innovations.
Not surprisingly, Apple was delighted with the ACCC decision. “We believe the ACCC’s decision is great for Australians who want the easiest, most secure and private payment experience possible with Apple Pay,” a company spokesperson said.
“Today, millions of users from 3,500 banks in 15 markets enjoy using Apple Pay, and we look forward to continuing to work with individual banks in Australia and around the world to bring Apple Pay to their customers too.”
However, the banks, which were refused the ACCC’s blessing to take on Apple together, were disappointed.
Lance Blockley, managing director of management consultancy The Initiatives Group and spokesperson for the four banks, said: “Mobile wallets are currently overwhelmingly focused on mobile payments, but will soon take in loyalty programs, mass transit ticketing, access, identity and a great number of other future innovations. Ultimately there is no technical barrier standing in the way of our entire physical wallet becoming digital.”
“Apple has a stated desire to own the entire mobile wallet, and will use the beachhead into mobile wallets afforded to them by complete control over mobile payments on iPhone to exert control over the rest of the digital wallet. This in our view is aimed at increasing the services revenue they can earn from iPhone users,” he added.