(14 February 2017 – Australia) The coalition of banks fighting with Apple over access to its near field communication (NFC) functionality have amended their application to the industry regulator and abandoned plans to collectively bargain over fees passed to consumers.
The banks, Westpac, Commonwealth Bank, NAB, and Bendigo and Adelaide Bank will focus on their plans to gain access to the iPhone’s NFC chip, which enable contactless payments.
The banks also halved the authorisation term being sought to 18 months.
“The applicants are ready, willing, and able to participate in Apple Pay, alongside being able to offer their customers their own mobile wallet products,” said Lance Blockley, a spokesman for the banks.
He said giving up a slice of CBA’s payments “interchange fee” — which average 0.5 per cent and are paid by a merchant’s bank to a cardholder’s lender — to Apple was not the solution to settling the spat. A global survey from Accenture showed almost a third of customers, dubbed “nomads” — digitally savvy consumers — were willing to switch banks if they were not given options such as mobile payment apps, which more than half expect to be able to use for contactless payments.
While Google allows banks to access NFC on the Android platform, Apple has claimed banks will pass on Apple Pay fees to customers, and allowing access to the NFC functionality would compromise security.
Apple has also argued that allowing banks to collectively negotiate would stifle innovation and “create a troubling precedent”.
Blockley added that the banks’ intention was to increase consumer choice and competition between mobile wallet developers. He said the banks were not attempting to thwart Apple Pay’s growth and that both parties “need each other”, noting that “Apple is not a bank or a credit card scheme … nor are the applicants manufacturers of mobile phones”.
During its report earnings, Bendigo and Adelaide Bank’s chief, Mike Hirst said it was “a reasonable piece of reciprocity” for the technology manufactures to provide access to its payment platform in return for accessing banks’ payments infrastructure they have “invested heavily in”.
“Apple say we’re trying to stifle competition and we only want to push our own wallets and all that sort of thing, yet at the same time their CEO is saying ‘look the banks should just forget about all this and actually just use the Apple platform because that’s the best platform and it will be developed for everybody etc’,” he said. “So they’re actually trying to stymie competition to some degree in this development space, which I don’t think is appropriate.”