Australian Banks Narrow Focus On Apple Pay Collective Bargaining Request

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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.

The banks have been seeking regulatory approval since mid-last year to collectively negotiate with third-party mobile providers such as Apple on conditions relating to competition, best practice standards, and efficiency.

The ACCC then raised these concerns in its draft determination, following which the banks chose to remove from consideration items the ACCC considered may lead to a public detriment.

The banks - Commonwealth Bank of Australia, National Australia Bank Ltd., Westpac Banking Corp. and Bendigo & Adelaide Bank Ltd. - are seeking permission from the regulator to negotiate together to boost their bargaining power with the USA tech giant.

Last week, a report by Reuters stated that Macquarie Group and ING Direct would start using Apple Inc's mobile payment service in Australia this month, joining the Australia and New Zealand Banking Group, which was the only one of the major banks to not call for cartel authorisation and adopt the Apple Pay system.

In a separate submission supporting the banks, the Australian Retailers Association said the opportunity to negotiate collectively would benefit "all banks, merchants, app developers and ultimately customers in Australia and overseas".

The applicant banks have since flatly rejected Apple's "unsupported assertions" and have claimed Apple's "conspiracy theories" about "Trojan horse fees" are a fantasy. Previously their arguments also addressed the fees Apple charges to Apple Pay issuers. The banks and retailers argue this restricts consumer choice, and prevents them from offering compelling "digital wallets".

What this means is that, if banks had access to Apple Pay, they could develop their own mobile wallet apps and thus users would not be tied in to using Apple's solution. This has global implications for the use of NFC on smart phones.

Four big Australian banks haven't given up the fight to convince the country's antitrust regulator that they get some concessions from Apple over Apple Pay. "Any delay or frustration will be as a result of Apple refusing to negotiate", Blockley said.

"All the banks are asking for is for the NFC to be opened up, or the antenna to be opened up on the Apple phones", Bendigo and Adelaide bank's managing director Mike Hirst told investors during the bank's 2017 interim results earnings call. "Both parties need each other to bring strong mobile payment offerings to the market". Their legal team has now followed that advice and so it would appear the fix is isn to turn the tide against Apple in the commission's final decision.

"The only benefit that would accrue to the banks in that case is a purely private benefit where they would be allowed to continue to free-ride on the significant investments made by Apple in its devices, iOS platform, and Apple Store infrastructure, and specifically in this case on the underlying technology installed on Apple devices to facilitate NFC payments without paying any fees for transactions processed via Apple Pay".

NFC supports far more than contactless payments, and makes life easier and more convenient for consumers around the world by making it simpler to make transactions, exchange digital content, and connect electronic devices with a touch.

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