Apple Pay stoush: Banks focus efforts on getting iPhone NFC access

Apple Pay stoush: Banks focus efforts on getting iPhone NFC access

​Banking cartel holds firm on Apple appeal being solely about NFC access

The banks have scrapped all of their previous complaints about transaction fees but still want full access to the NFC (near field communications) antenna in the iPhone which interacts with contactless payment systems.

Thus far in the case, Australian banks have primarily stuck with two central points of contention: the fees Apple charges and access to using the Apple Pay function for their own apps.

In a submission to the competition regulator on January 31, Apple said there were no public benefits to providing the banks access to its contactless payment system, and that doing so would give them a "free-ride" on Apple's investment in technology. On the iOS and iPhone operating system, only Apple is now allowed access to the NFC function.

"This application has always been about consumer choice, and allowing competition between the makers of mobile wallets to offer the best products and features they can to determine which mobile wallet consumers will use", he says.

"Given that Apple can't actually make a payment without using the banks' infrastructure, it seems to me a reasonable piece of reciprocity for Apple to actually open up their infrastructure to the banks, in exchange for the banks opening up the infrastructure for them". In this case, users could perform Apple Pay transactions through the application from their bank, which would increase traffic through those applications.

Previously, the banks also sought permission to collectively negotiate with Apple over its tight contract conditions, which prevent banks from passing on or disclosing any of the costs of paying for Apple Pay to customers or other businesses.

"That hasn't fully happened with the ACCC applicants, because the conversation is happening through the ACCC process, compared to what normally happens, which is we have the conversation bilaterally". All customers benefit from real competition.

They had also sought permission to launch a collective boycott of the service for up to three years, but last year the ACCC rejected their request in an interim decision it said was "finely balanced".

Rod Sims, the ACCC chairman however maintained that ACCC is not yet satisfied with the arguments given by the cartel. The banks and retailers argue this restricts consumer choice, and prevents them from offering compelling "digital wallets".

The Australian Retailers Association (ARA) - which represents 5,000 independent and national retailers - joined Bendigo and Adelaide Bank, Commonwealth Bank of Australia, National Australia Bank and Westpac Bank in their Apple Pay battle last week. "Any delay or frustration will be as a result of Apple refusing to negotiate", Blockley said. Apple keeps it guarded and does not allow any other application to use it other than Apple Wallet for security reasons.

"Apple is not a bank or a credit card scheme, and Apple can not on their own complete a mobile payment. Nor are the applicants manufacturers of mobile phones - both parties need each other to bring strong mobile payment offerings to the market", Blockley added.

In its latest submission, the banks held firm that NFC access would create opportunities to invest in NFC capabilities that do not exist without access.

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