ACCC knocks back the banks on Apple Pay

The competition regulator has rejected an application by the banks to collectively negotiate with technology giant Apple over access to the iPhone’s “near field communication (NFC) controller.

Commonwealth Bank of Australia, Westpac Banking Corporation, National Australia Bank and Bendigo and Adelaide Bank had asked the Australian Competition and Consumer Commission for permission to negotiate as a block in order to give them more negotiating power to have Apple open the NFC to their own digital wallets.

But ACCC chairman Rod Sims said on Friday: “We are concerned that the proposed conduct is likely to reduce or distort competition in a number of markets.

“The banks said they are “disappointed” with the decision, saying could stifle their ability to compete in the future market for digital wallets. The banks also say it will limit the continued innovation of mobile wallets not just by banks but retailers, mass transit organisations and government entities.

“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,” Mr Sims said.

If the banks got access to the NFC, this would affect Apple’s current integrated hardware-software strategy for mobile payments and it “could artificially direct the development of emerging markets to the use of the NFC controller in smartphones. This is likely to hamper the innovations that are currently occurring around different devices and technologies for mobile payments.

“The regulator also pointed to digital wallets and mobile payments “being in their infancy and subject to rapid change”.

The ACCC also said collectively negotiating was likely to reduce the competitive tension between the banks in the supply of payment cards.

The decision will mean each of the applicant banks will have to negotiate bilaterally with Apple should they want to provide Apple Pay to their customers.

ANZ Banking Group has already done a deal with Apple to allow its customers to use Apple Pay; so has Macquarie Bank, ING and many mutuals. The banks are paying an undisclosed fee to Apple.


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