Apple hits back at Australian bank 'cartel' in Apple Pay fight

Apple hits back at Australian bank 'cartel' in Apple Pay fight

Apple has accused Australian banks of using "innuendo and misstatements" to support their attempts to overcome restrictions imposed by the consumer electronics firm on the use of iPhones for mobile payments.

Apple Pay was launched in Australia in November 2015 through a limited partnership with American Express but was met with resistance from local banks because they are prevented from accessing Apple's near field communication (NFC) technology, which enables tap and go payments.

Commonwealth Bank, National Australia Bank, Westpac and Bendingo, have applied to the Australian Competition and Consumer Commission (ACCC) for permission to negotiate collectively with Apple over NFC access and to challenge what they see as anti-competitive behaviour.

The banks would like to offer their own digital wallet services via Apple's iPhones but instead have to either work around the restriction, by placing a tap-and-go sticker on the back of the phones, or else sign up to Apple Pay and share any revenue with the technology giant.

In its submission to the ACCC, Apple accuses the banks of acting as a cartel to undermine competition in the local payments market.

"The request by the applicant banks would slow innovation and reduce choice by protecting members of the cartel from competition with each other," states the letter.

Apple further claims that opening up its proprietary hardware and software to banks would constitute a security risk: "Providing simple access to the NFC antenna by banking applications would fundamentally diminish the high level of security Apple aims to have on our devices.”

Apple notes that the banks account for a 66% market share in credit cards, adding: "Given their scale and market share, the applicants are essential to Apple's ability to offer Apple Pay on a meaningful basis within Australia."

Comments: (6)

David Griffiths
David Griffiths - Number19 Consulting - Hertford 10 August, 2016, 11:161 like 1 like

This is indeed a problem.  If Apple continues to restrict access to NFC for the banks, then any bank app that uses NFC is primarily restricted to Android, which means that the banks are only able to deliver services to a subset of their customers, which is restrictive for the banks and far from ideal for the customers.  Apple, however, have the same problem: they can't expect to be in a position of world payment domination unless they are able to reach all of the people who want to make a payment with a phone.  Without a doubt, they need the banks, but given that, they still need to reach those people that do not have an iPhone!  The reality is that Apple do not have the answer ...

A Finextra member
A Finextra member 10 August, 2016, 13:381 like 1 like

This isn't a new problem - companies have been asking Apple for access to the secure element for a long time now. The suretap wallet here in Canada, which had the backing of the large telcos, failed at least in part because it wasn't ubiquitous. It only worked on Android and Blackberry and not iOS because Apple refused access to the secure element.

David is 100% correct - without ubiquity none of the "Pays" will be able to gain dominance.

A Finextra member
A Finextra member 11 August, 2016, 16:22Be the first to give this comment the thumbs up 0 likes

@David, It's safe to assume the primary reason banks would want to use NFC is for direct account payment. Why would Apple open the doors to what would be a competitor?

Apple have never seeked ubiquity, rather the opposite. Historically they have always been content to build well-decorated walls around their products and services and not engage with other providers, who could compete, damage or influence their product vision. 

While Appple Pay's uptake has been underwhelming, people still go into a frenzy over Apple products. Therefore, the likelyhood is that more and more people will continue to want to try Apple Pay and the banks will eventually be forced to cave. See Barclays in UK as an example. 

David Griffiths
David Griffiths - Number19 Consulting - Hertford 11 August, 2016, 16:57Be the first to give this comment the thumbs up 0 likes

@Padraig, not sure what you mean by "direct account payment" but since Apple Pay is about NFC, I am assuming that you mean providing an alternative to the contactless debit card.  If this is the case, then Apple certainly is not a competitor, Apple is a facilitator - and Apple does charge for the service.  

The problem that Apple has (and so do the others) is that, for the majority of consumers, the thrill and excitement of making a retail payment with a mobile phone doesn't come close to repaying the technical debt incurred in setting it all up.  The same goes for the banks: in order to serve their customer base effectively, a bank electing to support Apple Pay also needs to support Android Pay and Samsung Pay and Windows Pay and ...

Apple have already engaged with the global card schemes to make this thing work, which is technically sound but of limited consumer appeal or as you say, "underwhelming".  I don't hear of that many people demanding the banks support Apple Pay, but I do envisage consumers using an NFC payment facility as part of a wider, more engaging, smartphone banking app offering, but what's the point for the bank if it doesn't work on the iPhone?  

The history of Apple Pay take up clearly shows that Apple isn't in the driving seat in this car.  


A Finextra member
A Finextra member 12 August, 2016, 11:41Be the first to give this comment the thumbs up 0 likes

@David I was referring to direct bank account payment, which is what I am assuming is the goal of these banks who are requesting NFC access. Apple would then be a facilitator to a competing mobile payments service. I can't see any reason why they would do that, thus the current standoff. 

I don't know if you have used Apple Pay or maybe you had a different experience than I had, but it is not thrilling or exciting. As with most early technologies which haven’t been adopted, it can be awkward and embarrassing. Being the only person in a queue who says they want to pay via Apple Pay always turns people's heads, not always in a good way. You are unsure if Apple Pay will work for this merchant, how the cashier will respond and if you will ultimately hold up the queue by testing it. Pymnts has a great tracker which shows declining repeat usage reasons

As mentioned in my previous comment, see reference to Barclays in the UK for a bank who was ultimately forced by customers to support Apple Pay.


A Finextra member
A Finextra member 31 August, 2016, 16:33Be the first to give this comment the thumbs up 0 likes

This may end up the same way as Microsoft when they tried to restrict access to browsers. Apple is no longer a niche player, so they have to allow competition to compete fairly. I love Apple Pay and use it all the time, but if they start restricting my experiences with my bank and my favorite retailers, I'm not sure how I'll react. I already get upset when the guy with a new Samsung phone can pay at any terminal while I have to use cash or plastic. Apple is trying to play the same game of being a middleman where there should be none. Instead they should ask for other kinds of royalties to use their platform, and let Apple Pay compete on its own. As consumers we'll probably see better innovation in payments too.