Australian regulator to block collective bank bargaining on Apple payment system

Australian regulator to block collective bank bargaining on Apple payment system

The Australian Competition and Consumer Commission (ACCC) has released a draft determination rejecting a bid by Commonwealth Bank, Westpac, NAB and Bendigo and Adelaide Bank to collectively bargain with tech giant, Apple.

It is understood that Apple and the banks might explore a compromise that would allow their proprietary wallets to access the NFC, so long as payments are routed through Apple Pay and the security infrastructure known as the "secure element".

ACCC chairman Rod Sims, announcing the draft determination, said banks can already offer competing digital wallets on iPhones without direct access to the NFC. Only Apply Pay is now able to access the smartphone's NFC capabilities.

Secondly, the banks wanted to remove restrictions Apples imposes on them which prevent them from passing on fees, charged by Apple to the banks, for use of its digital wallet. The group was seeking to be entered into group talks with Apple so they could negotiate a deal wherein they would be given NFC hardware access available on the iPhone.

The ACCC's decision is just a draft at this stage and there'll be further public consultations. "The ACCC is not now satisfied that the likely benefits from the proposed conduct outweigh the likely detriments".

While the ACCC will still seek feedback before making its final ruling, its early comments are telling: it says bank bargaining would limit competition and could lead the banks to unite in blocking Apple Pay for their customers for up to three years.

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"If the draft determination of the Australian competition regulator stands, effectively there will be no competition against Apple for mobile payments on the iPhone", the banks' spokesperson Lance Blockley added.

The banks had argued increased competition and choice, innovation and investment, greater pricing efficiency, and greater consumer confidence would flow from them being allowed to collectively bargain with Apple.

As of this writing, ANZ and American Express are the only top Australian banks that offer Apple Pay. Moreover, the threat of such pass through is likely to constrain Apple in setting the size of these fees.

The first being access to the near-field communication controller in iPhones, which the banks want to leverage for use in their own digital wallet apps.

The applicant banks said they have not given up. This would allow the banks to boycott Apple's mobile payments services as negotiations commence.

Also noting that giving the banks the go-ahead would allow them not to sign up to Apple Pay for three years, "the ACCC is not now satisfied that the likely benefits from the proposed conduct outweigh the likely detriments", Sims said. The differences between Apple Pay and Android Pay gives bansk and consumers choice as they delvier payment solutions differntly.

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