Australia’s big banks have suffered a blow in their battle with Apple. A draft determination from the Australian Competition and Consumer Commission (ACCC) suggests the banks will not be granted leave to collectively bargain with, and boycott, Apple for up to three years over its Apple Pay service. A final determination will not handed down before March.
But the four banks – Bendigo and Adelaide, Commonwealth Bank, NAB and Westpac – have said they will continue to work with the ACCC to get their arguments across. Of the majors, only ANZ currently offers its customers the Apple Pay service.
The other big banks’ core argument to the ACCC was that Australian iPhone users would only be able to use Apple Pay if they wanted a digital wallet service, which the banks said was anti-competitive.
However, Australian consumers already have a variety of digital wallet options. For example, Android phones with built-in near field communications (NFC) chips are now being widely used as a platform for contactless digital payments.
Lance Blockley, a payments industry consultant who has been working with the banks on their ACCC submission, said: “If the draft determination of the Australian competition regulator stands, effectively there will be no competition against Apple for mobile payments on the iPhone.
“The application has never been about preventing Apple Pay from coming to Australia or reducing competition between wallets. It has always been about providing consumer choice and innovation.”
ACCC chairman Rod Sims said: “This is currently a finely balanced decision. The ACCC is not currently satisfied that the likely benefits from the proposed conduct outweigh the likely detriments.”
Read more about Apple Pay in Australia
- 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.
- Despite Australia being iPhone crazy, its banks are not exactly rushing to enable the payment process.
Sims noted that the banks could still offer their digital wallets on other smartphones, or offer accessories that would allow iPhone users to use their bank’s rather than Apple’s contactless payment service, so competition had not been thwarted.
Apple said in a statement: “We are focused on offering the easiest, most secure and private payment experience possible, and millions of Apple Pay users from 3,500 banks in 12 countries enjoy that today.”
It said the ACCC draft decision was “great for Australians and we look forward to continuing to work with individual banks in Australia and around the world to bring Apple Pay to their customers”.
Meanwhile, Apple Pay is entering new areas. Cloud accounting software company Xero has announced that its users will be able to use Apple Pay and Stripe in combination to pay online invoices. Although theoretically this speeds up the transaction, it adds costs to the payment process, with both Stripe and Apple Pay collecting a transaction fee.
Despite its slow progress in Australia, demand for Apple Pay is rising internationally. Commenting on Apple’s full-year results, CEO Tim Cook said transaction volumes for the service had risen by 500% during the year – although that comes off a very small base a year ago.
In Australia, the battle lines with the big banks are still being contested, however. .........................................................................................