Australian banks blocked from Apple Pay software
Australian banks have been overruled in a fair competition case against Apple Pay, setting a precedent that may have global implications.
Four of Australia's biggest lenders petitioned the Australian Competition and Consumer Commission (ACCC) to overturn a restriction on developing their own digital wallets compatible with Apple software.
Between them, the Commonwealth Bank of Australia (CBA), National Australia Bank (NAB), Westpac and Bendigo & Adelaide control approximately two-thirds of the country's credit card market but have not allowed customers to make use of Apple Pay, which launched in Australia last year, due to the transaction fees incurred by contactless payments.
The ACCC has rejected their argument that preventing the use of non-Apple digital wallets with Apple Pay software is ultimately unfair to consumers, pointing to the fact that the banks are able to offer the service to their customers by negotiating directly with Apple; two of the country’s other lenders, ANZ and Macquarie, have already done so.
The decision comes shortly after the ACCC's ruling that the banks could not negotiate with Apple as one entity.
There is also a range of alternative devices being released that allow mobile payment... It is therefore uncertain how competition may develop.
In regards to the impact on fair competition, concerns were raised about the existing market in 'tap-and-go' payment cards and Apple's own business.
Rod Sims, ACCC Chairman, said: "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.
"Access to the NFC [near field communications] 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."
Apple currently has working partnerships with around 3500 lenders in 15 countries, none of whom have access to the baseline software of Apple Pay.
This ruling has been hailed by the technology company, who remain one of the biggest international names in processing contactless payments. The precedent set by this case will likely prove a legal boon in any further objections to the exclusivity of software, not just from Apple, but other contactless systems used by the likes of the London Underground, Starbucks and Barclaycard.