Australian Banks Narrow Focus On Apple Pay Collective Bargaining Request

Feb 14, 2017, 00:38
Australian Banks Narrow Focus On Apple Pay Collective Bargaining Request

The Commonwealth Bank of Australia (CBA), the National Australia Bank (NAB), Westpac, and Bendigo and Adelaide Bank have narrowed its joint application to the Australian Competition and Consumer Commission (ACCC) to exclusively focus on open access to iPhone's near-field communication (NFC) technology, accusing Apple of refusing to do anything any other way than "Apple's way".

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. According to the banks, full access to NFC on iPhone devices "would enable the delivery of substantial public benefits to Australian consumers", across a variety of categories other than mobile payments, including loyalty programs, member security, and other NFC-related cases.

Throughout the process, the banks have claimed they want access to the NFC controller in iPhones, as Apple now does not allow any other entity direct access. Apple has restricted access to its own apps and says giving others access would undermine the security and usability of the system.

"NFC access is required to enable real choice and real competition for consumers, and to facilitate innovation and investment in the digital wallets available to Australians".

The banks stand to lose millions in fees from Apple, as it will take a cut of what they collect from credit card companies when customers pay on credit.

In a submission to the competition regulator on January 31, Apple said there were no public benefits to providing the banks access to its contactless payment system, and that doing so would give them a "free-ride" on Apple's investment in technology. In a draft ruling in December, the Australian Competition & Consumer Commission refused permission for the banks to negotiate collectively, but said the decision was "finely balanced". "All customers benefit from real competition", the submission said.

"Apple is completely wrong in its assertion that the proposed conduct is about fees and not about access".

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ACCC Chairman Rod Sims said if fees were the main motive for the banks' application, then it would be hard for them to get an approval. The banks and retailers argue this restricts consumer choice, and prevents them from offering compelling "digital wallets".

The major Australian banks and Apple got into loggerheads past year and the battle still continues. NFC is commonly used as a means of contactless payment for smartphones.

"All the banks are asking for is for the NFC to be opened up, or the antenna to be opened up on the Apple phones", Bendigo and Adelaide bank's managing director Mike Hirst told investors during the bank's 2017 interim results earnings call.

"The applicants expect that Apple Pay would be offered to their customers alongside open access to the NFC function - any delay or frustration will be as a result of Apple refusing to negotiate".

On the Android operating system, any installed application can access and use the open NFC function.

iPhone users can use Apple Pay to register credit cards, and making payments by swiping the devices over contactless payment terminals. "Nor are the applicants manufacturers of mobile phones - both parties need each other to bring strong mobile payment offerings to the market". Now they don't want to discuss the cost factor and are only concerned about getting access to NFC.