Australian banks fight back over Apple Pay 'fantasy' claims

Australian banks fight back over Apple Pay 'fantasy' claims

The group of Australian banks fighting it out with Apple over the introduction of the consumer electronics giant's mobile payment system have narrowed down their complaint to the Australian Competition and Consumer Commission (ACCC) to focus solely on open access to the NFC function on iPhones.

The five banks - Commonwealth Bank of Australia, Westpac Banking Corporation, National Australia Bank, and Bendigo and Adelaide Bank - were initially seeking permission from the competition watchdog to engage in collective negotiation with Apple in relation to the roll out of Apple Pay in Australia.

In December, the Commission issued its provisional ruling, coming down in support of Apple and expressing concerns that a ruling in favour of the banks could reduce or distort competition in a number of markets.

In their latest submission, the banks have sought to address the ACCC's concerns by removing collective negotiation on the potential to pass-through the additional fees Apple wishes to impose on the payment system, and limiting the authorisation term to 18 months - half the original term sought.

The response comes just a week after Apple accused the banks of wanting to price Apple Pay out of the market and at the same time condition consumers to accept a fee-based model for tap-and-pay transactions for their own mobile wallets.

Speaking on behalf of the banking collective, Lance Blockley has dismissed Apple's carping as pure fantasy.

“This application has always been about consumer choice, and allowing competition between the makers of mobile wallets to offer the best products and features they can to determine which mobile wallet consumers will use," he says. "The applicants want to put up their digital offerings head to head with Apple Pay, and let the market and individual consumers decide which best suits their needs."

Unlike Apple, Google's Android operating system allows any installed application to access the open NFC function, he points out.

“Apple is not a bank or a credit card scheme, and Apple cannot on their own complete a mobile payment, Blockley continues. "Nor are the applicants manufacturers of mobile phones - both parties need each other to bring strong mobile payment offerings to the market.”

The banks' arguments have been supported by the 5000 members-strong Australian Retailers Association. In a separate submission to the regulator, they say: “In our view — for as long as Apple Pay remains the only app that can use the iPhone’s NFC functionality — the potential for innovation in mobile wallets and mobile payments will be limited."

The ACCC is expected to issue its final ruling on the dispute in March.

Comments: (3)

Brett King
Brett King - Moven - New York 13 February, 2017, 20:33Be the first to give this comment the thumbs up 0 likes

The fact is that had Australian banks not waited until Apple had launched this to suddenly have their "come to Jesus" moment on mobile payments, they could have invested in their own NFC-based capabilities. But that's not what they did, so instead they have to rely on a rear-guard action against Apple. This is just another example of banks having a failure of imagination and then trying to get regulatory support for a strong platform coming in and providing solid competition for customers

Patrick Fitzgerald
Patrick Fitzgerald - EY - Geneva 14 February, 2017, 07:23Be the first to give this comment the thumbs up 0 likes

I'm not very close to the details, but I was under the impression that australian banks had in fact done exactly what Brett King suggests they should have done, see eg: (2013).


Arjeh Van Oijen
Arjeh Van Oijen - Icon Solutions - Amsterdam 14 February, 2017, 10:12Be the first to give this comment the thumbs up 0 likes

the complaint is here that Apple shields off the NFC device on the iPhone to be connected to no other apps than their own wallet. The fact that banks did not launch an alternative NFC app/wallet for the iPhone was not they did not wanted to, but that it was/is technically impossible without Apple opening access to the NFC device.