Big Banks tell the ACCC: We’re ok with Apple Pay Fees – we want NFC access

The battle continues

The battle between the big banks and Apple continues with the banks making a further submission to the ACCC as a follow up to the interim decision not to grant them the right to collectively bargain with Apple.

Late last year the ACCC handed down a draft ruling that it was not in the public interest for Westpac, NAB and Commonwealth (Among with Bendigo Bank) to act as a cartel in collectively bargaining with Apple over access to Apple Pay for their customers.

That group of banks have returned to the ACCC with a change in plan – they now don’t care about the costs, they just want access to the iPhone NFC.

The ACCC will now need to rule if the four banks can sit together around a table to negotiate with Apple over access to the NFC chip alone.

NFC is “near field communication” and it is the technology by which “tap and go” works – on mobile phones it’s the chip that allows both payments as well as pairing of devices and information exchange.

Apple however have a wall around their NFC chip, and it is not used by any other application other than Apple Wallet.

They do this for security reasons, Apple believe that by opening NFC to individual apps and bypassing their secure zone there is a greater risk to consumers.

You’d have to say, Apple have a much better record on device security than almost anyone else, and certainly iOS over Android is a no-brainer.

In their application to the ACCC, the banks say “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”

They go on to say “With NFC access, a customer could have in their phone:”

  • Apple Pay and a mobile wallet from the bank or issuer of their card;
  • Apple Pay and mobile wallets from several banks or issuers
  • Apple Pay, mobile wallets from several banks or issuers and any number of third party mobile wallets

This is a positive move from the banks.  Their hope is that consumers will then chose their app for payment and thus save them any pass-through fees to Apple.  The problem is, Consumers don’t care about that.  Consumers want convenience.

In my own submission to the ACCC I made the point that while the banks think Apple is short sighted, the banks themselves are missing the point.

A single digital wallet is the only good solution to the transition from physical to digital.  How many people have just one bank or financial institution?  Anyone who uses more than one card will know that the idea of a wallet for each card is ridiculous.

And what the banks fail to address is the integration within Apple Wallet for things like loyalty schemes.  With Apple Pay correctly configured and in use, it’s possible to have your Supermarket rewards card in your “Apple Wallet” as well as your payment cards, and when paying for groceries simply choose the payment card and it automatically uses the loyalty card at the same time.

Plus, all of this is accessible from the lock-screen.  No need to turn your phone on, no need to do anything except present your phone to the payment terminal.

With bank apps and loyalty apps all separated, that convenience is lost and the use of digital wallets will stall and likely fail.

I respect the banks for re-focusing their submission, but in reality, it’s only because they saw some small light at the end of the tunnel in some of the ACCC’s words in the draft ruling.

For example:

  • The ACCC considers that there is likely to be some public benefit in increased competition and consumer choice in digital wallets resulting from the Applicants collectively negotiating and engaging in a boycott to seek access to the embedded NFC controller in iPhones and to Draft Determination A91546 & A91547 iv seek reasonable App Store access.
  • The ACCC therefore considers that there is a likely public benefit from the proposed conduct to seek access to the embedded NFC controller in iPhones and reasonable App Store access. However, the magnitude of this benefit is limited to some extent by the existing opportunities that enable the Applicants to compete against Apple Wallet.
  • The ACCC considers that there is a potential benefit of increased innovation and investment in digital wallets and other mobile apps using NFC technology if the Applicants were successful in negotiating access to the NFC controller. However, given the uncertainty in how these markets are likely to develop, the ACCC is not satisfied on the information provided by the Applicants that any such benefit would be significant.
  • The ACCC considers that there would be a small public benefit from the proposed conduct making it more likely that Group Participants obtain better information from Apple and thereby may make more informed decisions as to whether to enter into an agreement with Apple.

With all that said, we’re in for a long battle here.  The bank’s statement on this revised application comes with the following quote:

“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.

Seems the banks think Apple Pay hasn’t launched here – what they don’t know is that Australia is transacting with Apple Pay more than any country in the world!

All the while customers of non ANZ banks are missing out on the simplest and easiest payment system on the planet.  Apple Pay.

The only way to get it – change banks.  That will give them a message.

 

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Trev produces two of the most popular technology podcasts in Australia, Your Tech Life and Two Blokes Talking Tech. He hosts a nightly radio show on Talking Lifestyle, 8pm Monday to Friday in Sydney, Melbourne and Brisbane, appears on over 50 radio stations across Australia weekly, and is the Tech Expert on Channel 9’s Today Show and A Current Affair. Father of three, he is often found down in his Man Cave. Like this post? Buy Trev a drink!
5 Comments on this post.
  • Mike Boyfd
    13 February 2017 at 11:01 am
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    My sense is that – like the banks – the ACCC are lacking a clear understanding of the Apple eco-system and what that includes and more importantly excludes. In today’s world individual convenience is far more important than the perception of convenience provided by a Bank’s own platforms/apps. Apple Pay (and Google Wallet) are facilitators of service – not the service itself. The sooner the Banks realise this, the sooner they will retard their lack of relevance.

    • Trevor Long
      13 February 2017 at 11:05 am
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      Couldn’t agree more Mike. I’ll be submitting a follow up to the ACCC and would encourage others to do so – no matter what side of the debate you sit on. It’s vital the ACCC hear from real Australian’s about this.

  • Steven
    13 February 2017 at 12:13 pm
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    It was Apple who accused the applicants of delaying ApplePay’s entry into the Australian markets, not that they aren’t aware of it already being in the Australian market. Also, if you’re going to quote ANZ’s numbers, then you should also mention how terrible they actually are for all the song and dance Apple is making about ApplePay.

    In the end though, it won’t make a big difference. The ACCC could agree to the submission and Apple will still refuse to negotiate.

    The only real winners are the lawyers, consultants and PR people working for the banks and Apple.

    • Trevor Long
      13 February 2017 at 12:37 pm
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      You what mate? What’s your issue with ANZ – I know many people who switched banks to use ANZ for Apple pay and haven’t looked back.

      Why on earth would Apple negotiate with three aussie banks for NFC access with thousands of other banks are on board. It just wont happen

  • Steven
    13 February 2017 at 4:34 pm
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    lol – all I did was point out that your comment was inaccurate and that the ANZ numbers of 10m transactions shows that uptake has been very low.

    There’s plenty of actual discussion points in the submissions that can be discussed without needing to make stuff up.

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