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Apple Pay arguments against Oz banks ‘superficial and unconvincing’

Australia’s banks have argued in their joint response against Apple Pay to the Australian Competition and Consumer Commission (ACCC) that Apple’s arguments against collective negotiation on accessing Apple Pay due to security concerns are “unconvincing” and “superficial”.

The Commonwealth Bank of Australia, National Australia Bank, Westpac Bank, and Bendigo and

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Apple Pay arguments against Oz banks ‘superficial and unconvincing’

Adelaide Bank have been seeking regulatory approval to collectively negotiate with third-party mobile providers such as Apple on conditions relating to competition, best practice standards, and efficiency.

Specifically, they want non-exclusive access to the NFC chip, standardised security for all mobile payments systems, and price transparency on transaction costs within Australia — the last of which is a policy of the Reserve Bank of Australia.

In their joint response, Application for authorisation of limited collective negotiation in relation to mobile wallet and mobile payment systems: Response to interested party submissions [PDF], dated September 30 and published by the ACCC on Monday, the banks argued that they should be permitted to negotiate collectively with Apple.

“Apple would naturally prefer to deal with card issuers on an individual basis using the ‘take it or leave it’ approach that it has used successfully in other countries. However, its arguments against the collective negotiation are superficial and unconvincing,” the banks said in their response.

“They ignore real differences between integrated NFC-based mobile wallets and other mobile banking or mobile payment apps and infrastructure. They appeal to security without providing any explanation of how allowing choice and competition in iPhone payments would compromise that security.

They conflate a collective negotiation to redress imbalances in bargaining power with a hard-core cartel and use competition law concepts such as exclusive dealing and the national access regime that have no clear relevance to the assessment of benefits and detriments being undertaken.

“Finally, they assert that Apple will never compromise — but this is a self-serving assertion which plays up to Apple’s reputation but goes against its conduct in practice, and the ACCC should give it no more credence than it deserves.”

The banks noted that they have received support from Eftpos, MasterCard, the Australian Retailers Association, Heritage Bank, the Australian Payments Clearing Association, Australian Settlements Limited, Coles, Bluechain, Indue, and Tyro Payments.

In regards to Apple’s arguments that opening up access to Apple Pay would make its mobile payments system less secure, the banks countered with the fact that Google and Samsung have done so without issue.

The four banks also argued that choice, competition, and innovation will be stifled “at a critical time” in the development of the mobile payments market if Apple is allowed to refuse competitors the ability to provide integrated mobile payments on the iPhone — despite Apple utilising the NFC infrastructure that was built and paid for by Australian banks and companies.

“Collective negotiation is necessary in a context where Apple has the ability and incentive to lock competitors out of the iPhone’s NFC technology needed to make integrated mobile payments,” the banks said.

Pointing towards the fact that Apple holds approximately 40 percent of the smartphone market in Australia, the banks claimed that customers would be more likely to change credit card providers than phones in order to use mobile payments — as evidenced by the increase in ANZ Bank’s credit card applications since it began offering Apple Pay after it was accused of “pulling a fast one” by exiting the joint-bank submission to the ACCC.

According to Lance Blockley, spokesperson for the banks, access to Apple Pay’s NFC function could also be used to support public transport, airlines, and store loyalty and rewards programs, among other applications.

“Our application remains focused on providing Australian consumers with real choice and better outcomes for mobile payments, mobile wallets, and a range of other potentially NFC-powered functions,” Blockley said.

“This is about the future of mobile payments in Australia. Will it be ‘Apple’s way or no way’? Or a genuine level playing field so all consumers can have the best digital services, no matter what device they own?”


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