Australian banks combine to battle Apple
(26 July 2016 – Australia) Australian banks have sought to band together to negotiate as a single unit with technology giant Apple, in a bid to offer "digital wallets" on the iPhone.
The move may mean that the banks would collectively boycott the firm’s payment platform, Apple Pay,
Last week, Commonwealth Bank of Australia (CBA), National Australia Bank (NAB), Westpac and Bendigo Bank applied to the Australian Competition and Consumer Commission (ACCC), asking permission to negotiate as one with Apple.
ANZ Bank is the only Australian bank that has signed up to Apple Pay following last year’s launch, which included American Express as its first local partner.
The banks involved say they want to team up in talks with Apple over the access it gives businesses to its near field communication (NFC) hardware, the technology that allows phones to make tap-and-go payments.
The consumer watchdog must give its blessing to rival commercial businesses to undertake collective negotiations, with its decision expected in about a month. This would allow the collective bargaining to begin then, if the ACCC gives the banks the green light.
Access to the iPhone’s NFC component is limited to Apple’s system, whereas its competitor, Android lets other firms tap in to the hardware.
The banks claim this monopolises the tap-and-pay function for Apple, preventing other businesses from offering "digital wallets".
Most Australian lenders are reluctant to sign up to Apple Pay as they would need to share millions of dollars in credit card revenue for access to the technology. CBA has thus far worked around the impediment by providing a sticker to customers to place on the back of their iPhone.
The banks say they are only seeking to negotiate as a bloc on access to the NFC technology, not on fees, which would still be set by each institution.
"This is about providing Australians with real choice and better outcomes," said Novantas senior advisor Lance Blockley, speaking on behalf of the banks.
"If successful, the application would have tremendous benefits for the entire Australian mobile payments landscape including for public transport fares, airlines, ticketing, store loyalty and rewards programs and many more applications yet to be developed."
Banks see digital wallets as a critical way for lenders to maintain their position at the centre of their customers' financial lives.
ANZ Bank chief executive Shayne Elliott earlier this month said that he expects paying on a phone could overtake plastic cards in less than 10 years.
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