Future of Apple Pay Australia still unresolved

There are still uncertainties over Apple Pay among Australia’s big banks, but smaller finance firms are looking at ways to offer the payment service to their customers

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More than two years after Apple launched Apple Pay, only one of Australia’s big four banks – the ANZ – has adopted the digital payments platform.

The country’s other three major banks are still waiting on a ruling from the Australian Competition and Consumer Commission (ACCC) on their request to be allowed to collectively negotiate with, but also boycott, Apple on a number of fronts.

They maintain that Apple’s determination to control access to, and the use of, the near field communications (NFC) chip – which is key to secure contactless payment – in the iPhone limits consumer choice and that, in any case, their customers should not be charged extra payment fees by Apple to use its digital payments platform.

The ACCC declined to give the banks interim authority to proceed, instead giving itself more time to weigh up the arguments. A draft decision is expected any day, with a final announcement in early 2017.

In the meantime, payments specialist Cuscal has said it has worked with Apple so that 31 of its clients – Australia’s smaller banks and credit unions – will be able to give their customers access to Apple Pay.

Cuscal managing director Craig Kennedy said: “Our clients were clear that they wanted their customers to be able to use Apple Pay.”

The company has now updated the digital wallet it supplies to clients to allow them to offer their customers Apple Pay.

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Referring to the security and privacy claims that Apple makes about its service, Cuscal noted that the card numbers used to effect payments were not stored on the device or on Apple servers. However, that underpinning security is not delivered by Apple, but through a tokenisation service that is delivered by major credit card issuers such as Visa and MasterCard. Each time a transaction is made, a unique token is issued by their networks that allows the payment to be completed securely.

American Express offers a similar service and it, along with ANZ, were the first organisations to allow their customers to use Apple Pay in Australia. Since then, it has been a slog for the computer giant to gain further traction.

And it’s not as if Australians don’t like tap-and-go payments. According to the RFI Group, almost three out of five Australians have used a contactless card to make a payment. However, only one in 10 have used a mobile wallet.

The ongoing wrangle between the banks and Apple is likely to sour future relations regardless of the ACCC’s decision. It could also encourage the banks to focus on NFC-enabled Android phones as a digital payments platform.

In Australia’s case, that might make a lot of sense. According to research company Kantar, in the three months to September, Android phones’ share of the Australian market rose to almost 60%. Although the launch of the iPhone 7 did give Apple a sales spurt, its market share for the quarter was 37%.

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