The Commonwealth Bank, Westpac, National Australia Bank, and Bendigo and Adelaide bank sought authorisation from the ACCC to bargain with Apple and boycott its Apple Pay technology, in order to offer their own digital wallets to compete with Apple’s.
The banks argue that people should be able to make contactless payments using their digital wallet apps, not just Apple’s, but this notion has been rejected by ACCC Chairman Rod Sims.
“The ACCC is not satisfied, on balance, that the likely benefits from the proposed conduct outweigh the likely detriments,” Mr Sims said.
“We are concerned that the proposed conduct is likely to reduce or distort competition in a number of markets.
“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.”
So far, ANZ is the only member of the big 4 banks to embrace Apple Pay.
The main reason for the banks refusing Apple Pay is that it negotiates directly with card users for a slice of the revenue banks currently receive from card payments. The banks – with the exception of ANZ – do not want to share this revenue with Apple.
The Commonwealth Bank, Westpac, and National Australia Bank have each expressed their disappointment at this decision, and have vowed to review their positions on the matter in order to design their own mobile wallet and payment systems.
“The applicants made this application to seek to ensure they could participate in the future of mobile wallets, and not have the course of development for mobile wallets in Australia dictated by a single overseas corporation,” said the banks’ collective spokesperson, Lance Blockley.
Why do banks want their own mobile wallet technology?
The big banks have argued that gaining access to the NFC (Near-Field Communication) controller in iPhones would lead to the following benefits for the public:
- Increased competition and consumer choice in digital wallets and mobile payments in Australia
- Increased innovation and investment in digital wallets and other mobile applications using NFC technology
- Greater consumer confidence in mobile payment technology, leading to increased adoption of mobile payments in Australia
Although the ACCC agrees that the Big 4 adopting NFC technology would lead to increased competition in the market, it identified the following issues.
Why reject the banks’ bid?
These were the reasons for rejecting the bid, according to the ACCC:
- If the banks obtained the NFC smartphone technology, it would affect Apple’s mobile payment strategy and how it competes with Google, its main competitor in the smartphone industry.
- Access to the technology in iPhones for the banks would “hamper the innovations that are currently occurring” in a field that is still in its infancy. Digital wallets are still in their infancy and are subject to continual change.
- Apple wallet and other digital wallets can increase competition between the banks by making it easier to switch between card providers.
— 7 News Sydney (@7NewsSydney) March 31, 2017
Which banks have adopted Apple Pay?
ING and Macquarie Bank are the latest of nearly 50 banks to adopt Apple Pay, meaning you can make day-to-day purchases with your Apple smartphone if you are with them.
This means the Big 4 – or the ‘Big 3’ in this case, since ANZ have already sided with Apple – are some of the last remaining banks to adopt the technology.