17 October 2017
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Australian banks lose bitter battle with Apple Pay

31 March 2017  |  11754 views  |  0 Sydney Opera House 2

The Australian Competition and Consumer Commission has denied authorisation to the Commonwealth Bank of Australia, Westpac, National Australia Bank, and Bendigo and Adelaide Bank to collectively bargain with Apple and boycott Apple Pay.

The ruling ends a long-running and often acrimonious battle between some of the nation's biggest bank and Apple over access to the Near-Field Communication (NFC) controller in iPhones. In taking their claim to the ACCC, the banks sought to offer their own integrated digital wallets to iPhone customers in competition with Apple’s digital wallet, without using Apple Pay.

ACCC chairman Rod Sims says: “While the ACCC accepts that the opportunity for the banks to collectively negotiate and boycott would place them in a better bargaining position with Apple, the benefits would be outweighed by detriments."

These would include a significant distortion in competition between Apple and Google for market share, a negative impact on Apple's business model and strategy, and a market which is in its infancy with a range of alternatives to Apple Pay in development.

“Finally, Apple Wallet and other multi-issuer digital wallets could increase competition between the banks by making it easier for consumers to switch between card providers and limiting any ‘lock in’ effect bank digital wallets may cause,” Sims adds.

The banks expressed disappointment in the ruling, saying they will individually review and determine their future strategy for mobile wallets and mobile payments.

“Mobile wallets are currently overwhelmingly focussed on mobile payments, but will soon take in loyalty programs, mass transit ticketing, access, identity and a great number of other future innovations," says spokesman Lance Blockley. "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."

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