If you’re a customer of the Commonwealth, Westpac, NAB or Bendigo Banks and you’re waiting for Apple Pay or Android Pay to be available on your phone – don’t hold your breath, it’s not coming any time soon if at all. So it might just be time to switch banks.
When Apple announced Apple Pay it seemed obvious that it would be an instant success in Australia – after all, we’ve got the highest per-capita adoption of tap-and-go payments in the world. What I didn’t count on was the behind the scenes business dealings which continue to cripple the options for Aussie consumers.
While American Express and ANZ have jumped on board with both Android and Apple the other big banks have been silent. Until last week.
As a group, Bendigo and Adelaide Bank, Commonwealth, NAB and Westpac banks made a submission to the ACCC. Their submission seeks permission to participate in joint negotiations with “Mobile Wallet providers”.
You see, it’s not legal for a bunch of competing companies to get together to negotiate things because they might not be doing the right thing by their customers. You’ll remember this when it comes to Petrol Companies and Supermarkets – if they are found working together to drive prices up it’s a big no-no and the Australian Competition and Consumer Commission (ACCC) will come down hard on them.
Thus, a formal application from these big banks to undertake joint negotiations under the “Cartel Provisions” the ACCC controls. Hmmm.. A Cartel – that sounds good doesn’t it?
These banks are concerned that Google, Samsung and Apple all have far too much power over them as individual organisations, so the power of many might mean things could swing the way of the banks.
They state in their application things like:
…”Google has significant bargaining power in negotiations relating to Android Pay due to its control of a key operating system, and Samsung has significant bargaining power in negotiations relating to Samsung Pay due to its control of key mobile hardware.
However, Apple has particularly significant bargaining power in negotiations relating to Apple Pay due to its control of both a key operating system and key mobile hardware. Apple’s bargaining power in the proposed negotiations is increased because:
- Apple currently has a higher share of the smartphone market in Australia than in almost any other country, with 41.2% of the market, 4 and sold the two most popular handsets in Australia (as well as the fourth most popular) in the quarter to December 2015; and
- the average iPhone user is more affluent, spends more, uses mobile banking services more frequently, and adopts and consumes technology more enthusiastically than other smartphone users, making them particularly valuable to issuers.
This bargaining power and Apple’s negotiating strategies appear to have resulted in Apple Pay being introduced in other countries in circumstances that limit customer choice, security and transparency and that the applicants wish to avoid.”
Now, I could go on for hours here – but firstly – “limit customer choice, security and transparency” is listed as a concern. Which is strange, given Apple Pay offers a higher level of security to customers than you get with a card that you receive in the mail.
When it comes to transparency what Customers want most is transparency in fees and merchants and banks don’t exactly tell us what money changes hands behind the scenes do they? And customer choice? The only people limiting customer choice right now are the big banks.
It’s ridiculous. Their submission also states that …”it has also been reported that in other countries there have been concerns with the on-boarding process associated with Third Party Wallets, which have resulted in high rates of fraud.”
That reference is citing a New York Times article which interestingly talks only of the fraud in the onboarding process where people might add a card that isn’t there own to their “mobile wallet” but not in regard to any actual fraud when it comes to failures in the payment system itself.
Sure, the banks and Apple and Google need to lock down the process of adding cards – make a two step verification process part of the system – simple.
You’ll note that the ANZ hasn’t been mentioned here at all. That’s because they, like AMEX have begun offering Apple Pay and Android Pay to their customers.
When asked, an ANZ Spokesperson told EFTM; “We were invited to participate in industry discussions on the introduction of third party digital wallets to Australia, and were part of a series of these discussions along with our peer banks. ANZ also participated with the industry during the APCA-facilitated process to develop the Third Party Digital Wallet Security Guidelines, which we believe are an appropriate industry response to the entrance of third party wallets to Australia.
“We have made a clear choice however to embrace customer demand for choice, and entered a commercial agreement to offer Apple Pay to our customers in Australia. In this context, we discontinued discussions with the industry on this topic.
“Since launching Apple Pay in April, we have also partnered with Google to launch Android Pay in July, on top of already having our own mobile wallet in market – ANZ Mobile Pay. Our strategy is built around customer choice, irrespective of handset preference, and an “open” philosophy.
“We are very pleased with our partnership with Apple, and our customers are clearly pleased to have been offered that choice.”
Here’s the rub. These banks think they are king shit when it comes to what customers want. Breaking news, they aren’t.
I’ve had huge wraps on the innovation that has come from the Commonwealth Bank over the recent years. Their app is great, their Leo and Albert merchant terminals are brilliant bits of tech.
But what they are trying to do here is increase or maintain an industry metric that means nothing to consumers. App Usage.
The banks want their own apps to be able to control the total payment process, that would mean Apple opening up their NFC chip – Got news for you Aussie Banks. Ain’t gunna happen – even if you all sit on one side of the table, with someone from Apple, you are from Australia. We may be a big nation, but we’re 0.3% of the world’s population. Yep, we’re early adopters. Yep, we’re a wealthy nation.
Nope, it won’t make a rats of difference. It’s a case of delusions of grandeur from these big banks.
Perhaps instead of wasting time, resources, and money (the legal costs of just putting together the application would be insane) the banks should take a look at what would be good for their customers. Yep, it’s great that you have your own apps. Yep, it’s great that you have mobile payment solutions. But you have to accept the overwhelming simplicity and security that Apple Pay and Android Pay offer – and by supporting those payment “wallets” you’re actually taking part in competition – you’re offering just another great option for them.
Yep, it seems that by embracing Apple Pay you need to forego a small portion of the transaction fee you chip off the top of all our transactions, but if your own Apps and other payment solutions are so good – you won’t have to pay Apple so much will you?
If you’re a frustrated iPhone owner looking to take advantage of Apple Pay – get an American Express issued AMEX card, or do what I did and switch to ANZ. We’ve got to start voting with our feet folks – loyalty means nothing, go where the products are.