The Australian Competition and Consumer Commission will not authorise a group of banks to band together for negotiations with Apple over the iPhone maker’s Apple Pay platform, states a draft decision issued today by the ACCC. A final decision is not expected until March next year.
The Commonwealth Bank of Australia, Westpac, National Australia Bank, and Bendigo and Adelaide Bank had sought the competition watchdog’s authorisation to engage in collective bargaining with Apple and potentially a boycott of Apple Pay.
In Australia, Apple Pay is currently offered by a number of banks, but of the Big Four only ANZ has signed on.
The group of applicant banks has indicated that they would seek to force Apple to open up access to the iPhone’s NFC antenna, which is used for contactless payments. Only Apply Pay is currently able to access the smartphone’s NFC capabilities.
In addition, the banks want the right to pass on to consumers the fees that Apple charges card issuers for use of the payment platform.
Apple has attempted to negotiate agreements for the use of Apple Pay with each of the applicant banks bar one (which was not willing to sign a confidentiality agreement).
The ACCC’s chairperson, Rod Sims, said the draft determination is a “finely balanced decision”.
“The ACCC is not currently satisfied that the likely benefits from the proposed conduct outweigh the likely detriments,” Sims said in a statement.
“While the ACCC accepts that the opportunity for the banks to collectively negotiate and boycott would place them in a better bargaining position with Apple, the benefits are currently uncertain and may be limited.”
The draft decision states in regards to the NFC antenna that if banks successfully negotiated an agreement allowing their apps to use it, “there is likely to be some public benefit in increased competition and consumer choice in digital wallets”.
However, the benefit would be limited, the ACCC added, noting that there are other opportunities to compete with Apple’s digital wallet, including signing up for Apple Pay, using external NFC stickers and hardware, and offering services on other mobile platforms.
On the issue of passing on Apple Pay fees to consumers, the draft decision states: “The ACCC accepts the general principle that transparency of fees is likely to result in better informed consumer choices and increased pricing efficiency. The ACCC considers that there is likely to be benefit from letting market forces determine whether issuers pass on the Apple Pay fees to consumers and by how much. Moreover, the threat of such pass through is likely to constrain Apple in setting the size of these fees. “
Allowing banks to pass on fees they are charged by Apple for the use of Apple Pay “may provide the Applicants with the scope to discriminate against Apple Pay and Apple Wallet in favour of their own digital wallets in a way which would distort competition,” the draft decision states.
The applicant banks said they have not given up.
“If the draft determination of the Australian competition regulator stands, effectively there will be no competition against Apple for mobile payments on the iPhone,” said a spokesperson for the banks, Lance Blockley.
“The application has never been about preventing Apple Pay from coming to Australia or reducing competition between wallets. It has always been about providing consumer choice and innovation.
“Many organisations supported our application with their own submissions, across major retailers, fintech companies and card schemes, and we encourage them to respond to the draft determination with further submissions during the consultation period. The applicants are confident that the proposal would have real benefits and would avoid the detriments of Apple’s conduct, and look forward to the opportunity to provide that evidence to the ACCC.”