Apple Pay stoush: Banks focus efforts on getting iPhone NFC access

Banks drop push to pass on Apple Pay fees

A group of banks that have sought the right to act as a cartel in negotiations with Apple over the iPhone maker’s Apple Pay platform have narrowed the scope of their application to the Australian Competition and Consumer Commission (ACCC).

The Commonwealth Bank of Australia, National Australia Bank, Westpac, and Bendigo and Adelaide Bank in mid-2016 lodged an application with the ACCC to engage in collective negotiations with, and potentially boycott, Apple.

Of Australia’s Big Four, currently only ANZ supports Apple Pay.

The banks initially said that there were three key areas where they wanted to collectively bargain: The right to pass on Apple Pay fees to consumers, security standards, and access to the Near Field Communication (NFC) radio of the iPhone.

In November, the ACCC issued a draft decision that rejected the banks’ application. In a new submission to the competition regulator, the banks have modified the issues that they are seeking the right to band together on.

The banks now say that that they are seeking only to negotiate over NFC access. NFC is commonly used as a means of contactless payment for smartphones.

However, Apple restricts the use of NFC-based payments on the iPhone to Apple Pay. On Google’s Android mobile platform, open access to NFC capabilities allow the banks to integrate NFC-based contactless payments directly into their own apps.

“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 say in their latest submission (PDF). “All customers benefit from real competition.”

“The [ACCC’s] Draft Determination acknowledges that without NFC access, Apple Pay would remain the only NFC mobile payment service that can be used on Apple devices,” the submission states.

“Despite this, it appears that the Draft Determination fails to take into account the public benefit that would result from an increase in competition in mobile payment services.”

“Open access to the NFC function, as occurs on the world’s most popular and widely installed mobile operating system Android, is important not just to the applicants and mobile payments, but to a range of NFC-powered functions across many sectors and uses,” a spokesperson for applicants, Lance Blockley, said in a statement. “This has global implications for the use of NFC on smartphones.

“The application seeks permission to jointly negotiate with Apple; this is not an attempt to delay Apple Pay from entering the Australian market.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.”

Apple has said that even if the ACCC grants the banks’ application it will not offer open slather access to the iPhone’s NFC capabilities.

“This is not open to negotiation with any bank,” the company said in a submission last year.

“Apple designs its products to provide very secure experiences, especially where payments are concerned. Apple has been able to provide the required level of security with tight integration of hardware, software, and services such as Apple Pay. Apple does not provide banks access to the NFC radio because doing so would undermine the security our customers expect when using Apple devices to make payments.”

In a submission after the ACCC released its draft decision, Apple argued that even though the applicant banks have access to NFC capabilities on Android handsets they “have not used that access to provide apps to consumers that facilitate more innovative, faster or more convenient mobile payments than are available without embedded NFC radio access.

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Tags anz bankBendigo Bankmobile paymentsWestpacAndroid PayCommonwealth Bank of AustraliaApple PayBendigo and Adelaide Bank LtdNational Australia BankApple

More about ANZAppleApple.Australian Competition and Consumer CommissionCommonwealth BankCommonwealth Bank of AustraliaGoogleLanceNational Australia BankNearNFCWestpac

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