Retailers, payments association side with Australian banks over Apple Pay negotiations
Major retailers and payments associations filed letters in support of a regulatory request from Australia's three top banks that would force Apple into collective negotiations over third-party access to iPhone's secure NFC module.
In separate responses to the Australian Competition and Consumer Commission, Coles Supermarkets, the Australian Retailers Association, Bluechain, the Australian Payments Clearing Association and Australian Settlements Limited all voiced support in favor of establishing digital wallet access standards, ZDNet reports. The letters were posted as the ACCC denied the banks interim approval to negotiate last week.
Australia's "big-three" banks, the Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corp, along with Bendigo and Adelaide Bank, last month lodged a request with the ACCC to collectively negotiate terms under which Apple would allow installation of third-party digital wallet apps onto iPhone hardware.
The process would require Apple to open its secure NFC technology to third-party applications, presumably bank cards, loyalty cards and other branded assets marketed by the applicant banks. Apple currently restricts iPhone and Apple Watch NFC module access to Apple Pay, a strategy the banks view as anticompetitive.
Coles in its response said NFC is a key technology in furthering mobile wallet solutions, an area of interest for the company since it rolled out NFC enabled point of sale terminals in 2012. The company, which is also a credit card issuer marketing the Coles MasterCard, says a collective negotiation on industry standards and guidelines is in the customer's best interest.
"We note there has been an ongoing movement in Australia to improve the transparency of costs to consumers related to their banking products," said Nikala Busse, Head of Payments at Coles. "We would envisage that activity that supports cost transparency or creates incentives to lower costs for the benefit of consumers would be in the public interest."
Similarly, the ARA believes negotiations would spur competition in the mobile payments space, providing more choice for customers, card issuers and merchants. The group also argues an open standard can stimulate innovation, investment efforts and transparent interchange fees otherwise stymied by closed systems.
"In our view, for as long as Apple Pay remains the only app that can use the iPhone's NFC functionality, the potential for innovation in mobile wallets and mobile payments will be limited," ARA said. "A number of banks and merchants overseas have tried to develop mobile wallets and payment services using alternative technologies, but none have been successful."
Letters from the APCA, ASL and Bluechain read much the same.
PayPal also submitted an opinion, but fell short of endorsing the banks' request for negotiations. Instead, the digital payments giant took issue with the application's definition of "mobile wallet," calling the provided definition too broad. Additionally, PayPal noted the APCA's voluntary Third Party Digital Wallet Security Industry Guidelines should not be mandated without an open discussion on standards.
For its part, Apple contends the banks' ACCC application boils down to competition. Apple Pay, the company says, is perceived as a threat and the banks' request to negotiate an open standard is a strategy meant to "blunt Apple's entry into the Australian market."
In separate responses to the Australian Competition and Consumer Commission, Coles Supermarkets, the Australian Retailers Association, Bluechain, the Australian Payments Clearing Association and Australian Settlements Limited all voiced support in favor of establishing digital wallet access standards, ZDNet reports. The letters were posted as the ACCC denied the banks interim approval to negotiate last week.
Australia's "big-three" banks, the Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corp, along with Bendigo and Adelaide Bank, last month lodged a request with the ACCC to collectively negotiate terms under which Apple would allow installation of third-party digital wallet apps onto iPhone hardware.
The process would require Apple to open its secure NFC technology to third-party applications, presumably bank cards, loyalty cards and other branded assets marketed by the applicant banks. Apple currently restricts iPhone and Apple Watch NFC module access to Apple Pay, a strategy the banks view as anticompetitive.
Coles in its response said NFC is a key technology in furthering mobile wallet solutions, an area of interest for the company since it rolled out NFC enabled point of sale terminals in 2012. The company, which is also a credit card issuer marketing the Coles MasterCard, says a collective negotiation on industry standards and guidelines is in the customer's best interest.
"We note there has been an ongoing movement in Australia to improve the transparency of costs to consumers related to their banking products," said Nikala Busse, Head of Payments at Coles. "We would envisage that activity that supports cost transparency or creates incentives to lower costs for the benefit of consumers would be in the public interest."
Similarly, the ARA believes negotiations would spur competition in the mobile payments space, providing more choice for customers, card issuers and merchants. The group also argues an open standard can stimulate innovation, investment efforts and transparent interchange fees otherwise stymied by closed systems.
"In our view, for as long as Apple Pay remains the only app that can use the iPhone's NFC functionality, the potential for innovation in mobile wallets and mobile payments will be limited," ARA said. "A number of banks and merchants overseas have tried to develop mobile wallets and payment services using alternative technologies, but none have been successful."
Letters from the APCA, ASL and Bluechain read much the same.
PayPal also submitted an opinion, but fell short of endorsing the banks' request for negotiations. Instead, the digital payments giant took issue with the application's definition of "mobile wallet," calling the provided definition too broad. Additionally, PayPal noted the APCA's voluntary Third Party Digital Wallet Security Industry Guidelines should not be mandated without an open discussion on standards.
For its part, Apple contends the banks' ACCC application boils down to competition. Apple Pay, the company says, is perceived as a threat and the banks' request to negotiate an open standard is a strategy meant to "blunt Apple's entry into the Australian market."
Comments
Are you sure about that? See macxpress' comment, above.
Why do they feel they have the right to Apple's NFC chip and software?
There is no monopoly of Apple Pay, the consumer is not forced to use Apple Pay to make transactions, other means are available: cash, ordinary and contactless cards, even Android Pay!
I suspect this arguing is either:
a. A very hardline negotiating tactic to drive down the Apple Pay transaction fees.
or
b. Just some strawman argument by these groups to justify keeping Apple Pay, potentially a competitive rival, out of the Australian card transaction system.
Such antics may well spectacularly backfire for the Australian cartel colluding to protect the status quo: rather than abandon the Australian market, Apple may well acquire or even set up a payment processing company of its own as a service to its customers.
Such a processor can handle all cards, not just the Apple Pay; any refusal by the Australian banks to do deal with it will be a red flag for anti-competitive behaviour.
No one forces the software powering a microwave oven to be open for others to write on, nor is BMW forced to open its iDrive media console software software to others.
The (future) ruling probably would not require this, since the article says nothing about it, but Apple Pay uses the Secure Enclave, so I could see 3rd parties crying, "We want to use that too!" Forcing manufacturers to allow 3rd party access to their assets is a very slippery slope...
Good thing Apple isn't as weak as you two. I highly doubt they would just give up and walk away as you would suggest.
Did they close down the iBooks store due to the legal issues they had to faced in the US? Did Apple leave the US market due to all the legal cases they have faced in the US due to patent trolls? Tim Cook has also said numerous times they are still planning to open up their online stores (iTunes Movies and iBooks) in China that they had to close down earlier this year. Apple are still progressing with the rollout of Apple Pay in the US despite numerous large retail chains refusing to support it.
This case is still in the early days and I highly doubt Apple will be forced to open up access to their NFC chip. It's just the banks trying to negotiate more favourable terms for themselves because they know they have no way to compete with Apple on innovation or customer satisfaction.
Apple already have support from ANZ and AMEX in Australia and it's only a matter of time before the other big banks are forced to adopt Apple Pay or see their iPhone carrying customers change banks.
Apple hasn't forgotten what it's like to be the underdog when entering new markets and I'm sure they won't just walk away like cowards...
Apple: Hey Australia! We built a phone and made an operating system and added the ability to pay for things electronically without risk of fraud validated by a fingerprint.
Australia: That's cool, we're going to sue you and make you let us profit from it.
Apple: ...
https://www.android.com/intl/en_au/pay-supported-networks/
That's because Google get's its payday from monetizing the usage data of the dumb shleps foolish enough to still be using that piece of shit OS...