The competition watchdog has ruled that four of Australia’s big banks cannot team up to bargain with Apple or collectively boycott Apple Pay.
Commonwealth Bank of Australia, Westpac Banking Corporation, National Australia Bank, and Bendigo and Adelaide Bank are yet to offer Apple Pay and were seeking permission from the ACCC to bargain collectively with the consumer tech giant.
- Take our Which-50 reader survey and go into the draw for a chance to win a pair of Sony H.ear Bluetooth headphones or 1 of 5 Google Daydream VR headsets
The banks had wanted to combine their efforts to negiotate with Apple to access the Near-Field Communication controller in iPhones (which Apple doesn’t let any third party access) and reasonable access terms to the App Store.
If Apple granted this access, the banks could offer their own integrated digital wallets to iPhone customers in competition with Apple’s digital wallet — without using Apple Pay.
“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 would be outweighed by detriments,” concluded ACCC Chairman Rod Sims.
The ACCC cited three key reasons for denying the banks’ proposal.
“First, Apple and Android compete for consumers, providing distinct business models. If the applicants are successful in obtaining NFC access, this would affect Apple’s current integrated hardware-software strategy for mobile payments and operating systems more generally, thereby impacting how Apple competes with Google,” Sims said.
“Second, digital wallets and mobile payments are in their infancy and subject to rapid change. In Australia, consumers are used to making tap and go payments with payment cards, which provide a very quick and convenient way to pay. There is also a range of alternative devices being released that allow mobile payments; for example, using a smartwatch or fitness device. It is therefore uncertain how competition may develop.
“Access to the NFC in iPhones for the banks could artificially direct the development of emerging markets to the use of the NFC controller in smartphones. This is likely to hamper the innovations that are currently occurring around different devices and technologies for mobile payments,” Sims said.
The conduct is also likely to reduce the competitive tension between the banks in the supply of payment cards.
“Finally, Apple Wallet and other multi-issuer digital wallets could increase competition between the banks by making it easier for consumers to switch between card providers and limiting any ‘lock in’ effect bank digital wallets may cause,” Sims said.