Apple objects to 'free ride' requests by Australian banks to open up NFC on iPhone

Posted:
in iPhone
Apple has complained to the Australian Competition & Consumer Commission over the resistance of major banks in the country using Apple Pay, with a recent filing claiming a request to open up access to the iPhone's NFC controller would effectively allow banks to avoid using Apple Pay entirely.




Submitted to the ACCC by Apple on January 23, the statement concerns a draft determination from the ACCC issued in November last year. The determination concerned an attempt by the largest Australian banks to negotiate terms over Apple Pay's deployment, including fees and access to the iPhone's NFC controller, a request denied by the ACCC

In the submission, Apple claims the collective bargaining and attempts to access the iPhone's NFC functionality by the banks "will not achieve any of the public benefits claimed" by the Commonwealth Bank of Australia, National Australia Bank, Westpac Banking Corp, Bendigo, and Adelade Bank. As Apple considers this "cannot satisfy the statutory test," Apple "will not and cannot agree to the terms sought by the banks."

The banks want access to the NFC controller to be able to offer their own digital wallet systems, which is claimed in the application to provide competition. Apple doesn't believe this to be the reason, writing in the submission that the banks want NFC access to bypass Apple Pay entirely, avoiding transaction fees in the process.
Banks in Australia want access to the NFC chip found in the iPhone, but Apple objects, contending that the banks want to avoid transaction fees associated with Apple Pay.
Apple alleges the "increased competition" claim doesn't apply, as if the banks were given NFC access, they could start "specifically charging" customers for using Apple Pay, discouraging the use of the mobile payments platform and thereby reduce competition with their own proprietary wallets." Offering NFC access to the banks also creates significant costs, "including negative effects on consumer security and data privacy," the ability for users to select their payment card at the point of sale, and a depreciated customer experience."

The only benefit that would arise from NFC would be to the banks, not the public, Apple suggests. Banks "would be allowed to continue to free-ride on the significant investments made by Apple in its devices, iOS platform and App Store infrastructure," and the technology used to make NFC payments, "without paying any fees for transactions processed via Apple Pay's secure element infrastructure."

Apple also accuses the banks of using the ACCC authorization process itself to delay negotiations, with the process taking "some ten months" until the date of "Final Determination."

The forced delay is affecting approximately 70 percent of Australian cardholders, namely customers of the negotiating banks, with Apple suggesting the slow expansion also harms "smaller card issuers who already, or could in the future, rely upon Apple Pay" to provide mobile payments to compete against its larger rivals.

"The applicants' refusal to engage with Apple during the authorization process provides evidence of the chilling effect of the proposed collective conduct on the benefits of competition through innovation in digital payments offered by over 3,500 banks to millions of consumers in 13 countries."

The ACCC's interim ruling suggests that the use of Apple Pay instead of allowing the banks NFC access could in fact increase competition, by "making it easier for consumers to switch between card providers and limiting any 'lock in' effect bank digital wallets may cause."

The banks have called Apple's assertions "incorrect and supported," in a statement received by Bloomberg. The Application wasn't about preventing Apple Pay from expanding in Australia or reducing competition, the banks claim, suggesting it as being "about providing real choice and real competition for consumers and facilitating innovation and investment in the digital wallet functionality available to Australians."

A formal response to the ACCC's draft determination is expected to be published later this week.
«1

Comments

  • Reply 1 of 29
    Apple Bank. It's coming. Count on it.
    watto_cobra
  • Reply 2 of 29
    boredumbboredumb Posts: 1,408member
    "incorrect and supported..."
    UNsupported, of course (sorry to nitpick).


    (god, I hate autoblunder
    :( )
    edited February 2017
  • Reply 3 of 29
    Apple Bank. It's coming. Count on it.

    Not under that name.  https://www.applebank.com/  ; https://www.applefcu.org/  ; http://applebank.co/
  • Reply 4 of 29
    sricesrice Posts: 114member
    "Sure, but we'll charge 30% of the transaction." lol
  • Reply 5 of 29
    plovellplovell Posts: 786member
    Apple Bank. It's coming. Count on it.
    I don't think so. Being a bank gets you into all sorts of regulatory issues, as GE discovered. Although it never was an actual "bank", GE Capital was a huge player in financial services and subject to significant regulation. Apple does not want to go there.
    randominternetpersonpscooter63StrangeDayslostkiwijbdragon
  • Reply 6 of 29
    I think it's more the issue of what happens if it's opened up? I could see banks charging an Apple tax or breaking the NFC chip, but most importantly if anyone can access it, is it still as secure?
    stompychialostkiwiwatto_cobrajbdragon
  • Reply 7 of 29
    Apple Bank. It's coming. Count on it.

    Not under that name.  https://www.applebank.com/  ; https://www.applefcu.org/  ; http://applebank.co/
    Would be the easiest thing in the world for Apple to buy and rebrand.
    edited February 2017
  • Reply 8 of 29
    rob53rob53 Posts: 1,949member
    robbydek said:
    I think it's more the issue of what happens if it's opened up? I could see banks charging an Apple tax or breaking the NFC chip, but most importantly if anyone can access it, is it still as secure?
    A huge NO!!! If anyone can use it the FBI will be first in line with malware that sends everyone's keys to them for future use just in cast they need it. 
    lostkiwiwatto_cobra
  • Reply 9 of 29
    gatorguygatorguy Posts: 19,677member
    rob53 said:
    robbydek said:
    I think it's more the issue of what happens if it's opened up? I could see banks charging an Apple tax or breaking the NFC chip, but most importantly if anyone can access it, is it still as secure?
    A huge NO!!! If anyone can use it the FBI will be first in line with malware that sends everyone's keys to them for future use just in cast they need it. 
    I don't know that it would make mobile payments any less secure. They all follow the same rules. It looks like Apple's major objection based on it's comments is it could allow banks to avoid using Apple Pay and sharing any money with Apple,  running their own payment services secured by the iPhone's NFC-integrated "secure element". 
    edited February 2017 singularity
  • Reply 10 of 29
    Apple Bank. It's coming. Count on it.

    Not under that name.  https://www.applebank.com/  ; https://www.applefcu.org/  ; http://applebank.co/
    Would be the easiest thing in the world for Apple to buy and rebrand.

    Whatever.  Ain't happening.  It (might) make sense to offer more services like PayPal, but becoming a real bank makes no sense.  Yes, in theory, Apple could become a bank, and they could build out their own wireless network, and they could create a TV/movie studio, etc., etc. 

    StrangeDays
  • Reply 11 of 29
    Yeah considering Apple espouses sticking to their core elements, I have a harder time seeing them getting into the loathed banking industry than I do cars. Banking isn't a product that makes people happier with their lives. 
    lostkiwirandominternetpersonwatto_cobra
  • Reply 12 of 29
    quinneyquinney Posts: 2,521member
    Yeah considering Apple espouses sticking to their core elements, I have a harder time seeing them getting into the loathed banking industry than I do cars. Banking isn't a product that makes people happier with their lives. 
    except banker people
    watto_cobra
  • Reply 13 of 29
    anomeanome Posts: 1,196member
    Yeah considering Apple espouses sticking to their core elements, I have a harder time seeing them getting into the loathed banking industry than I do cars. Banking isn't a product that makes people happier with their lives. 

    Although one of the Apple principles, as seen with development of the iPhone, is to take something people aren't happy with and try to make it better.

    But I agree, getting into banking is a bad idea for Apple. Keep in mind, this article is about the problems they are having with Apple Pay adoption here, in Australia. A foreign company setting up an Australian bank, while much easier than it used to be, is still a nightmare. And they'd possibly have to do it in every market they operate in. Even establishing a US bank that can then operate in other territories is subject to regulations in each of those territories designed to protect the local banking industry. (And all this is about is protectionism.)

    Do the Swiss still have anonymous bank accounts? Could Apple establish, or partner with, a bank in Zurich, and everyone just gets an account number? It would cause problems with international transaction fees, and conversions to and from Swiss Francs, but it's a possibility...

    I have been a loyal customer of Westpac since before they were Westpac, but I don't trust them to have the best interests of their customers at heart. The problem with banks is, like oil companies, they're all evil, but they've made themselves necessary to modern life. I suppose the trick is to find the option that's the least evil, and, at the moment, it seems I may be on the wrong one.

    lostkiwiwatto_cobra
  • Reply 14 of 29
    rob53rob53 Posts: 1,949member
    gatorguy said:
    rob53 said:
    robbydek said:
    I think it's more the issue of what happens if it's opened up? I could see banks charging an Apple tax or breaking the NFC chip, but most importantly if anyone can access it, is it still as secure?
    A huge NO!!! If anyone can use it the FBI will be first in line with malware that sends everyone's keys to them for future use just in cast they need it. 
    I don't know that it would make mobile payments any less secure. They all follow the same rules. It looks like Apple's major objection based on it's comments is it could allow banks to avoid using Apple Pay and sharing any money with Apple,  running their own payment services secured by the iPhone's NFC-integrated "secure element". 
    Do they follow the same rules? Do they pass certificate information or keep it in a secure place (like Secure Enclave)? I can't see Apple opening up the Secure Enclave to third-party use because doing so creates a backdoor (actually front door) into the most secure portion of the iPhone/iPad, which would clearly make it not secure at all. We can't trust these banks or any banks to do the right thing and once the door is open, it's open to everyone. I only marginally trust banks to protect my money (still use Wells Fargo) and having a secure interface that's not owned by the banks or other financial institutions is, in my opinion, the best way to protect my money and financial transactions. 
  • Reply 15 of 29
    gatorguygatorguy Posts: 19,677member
    Where do yrob53 said:
    gatorguy said:
    rob53 said:
    robbydek said:
    I think it's more the issue of what happens if it's opened up? I could see banks charging an Apple tax or breaking the NFC chip, but most importantly if anyone can access it, is it still as secure?
    A huge NO!!! If anyone can use it the FBI will be first in line with malware that sends everyone's keys to them for future use just in cast they need it. 
    I don't know that it would make mobile payments any less secure. They all follow the same rules. It looks like Apple's major objection based on it's comments is it could allow banks to avoid using Apple Pay and sharing any money with Apple,  running their own payment services secured by the iPhone's NFC-integrated "secure element". 
    Do they follow the same rules? Do they pass certificate information or keep it in a secure place (like Secure Enclave)? I can't see Apple opening up the Secure Enclave to third-party use because doing so creates a backdoor (actually front door) into the most secure portion of the iPhone/iPad, which would clearly make it not secure at all. We can't trust these banks or any banks to do the right thing and once the door is open, it's open to everyone. I only marginally trust banks to protect my money (still use Wells Fargo) and having a secure interface that's not owned by the banks or other financial institutions is, in my opinion, the best way to protect my money and financial transactions. 
    Aren't Apple Pay transactions passed thru to the bank? That's how Apple Pay is currently being blocked, the banks won't allow transactions using it to be authorized. So no I don't think security would be compromised if banks could directly make use of Apple's NFC-equipped secure enclave, which is what they want. But I absolutely see Apple's concern that it could allow them to bypass Apple Pay altogether, cutting Apple out of the profit side. I don't see that as particularly fair.
    edited February 2017
  • Reply 16 of 29
    entropysentropys Posts: 1,422member
    Why would Apple need to become a bank? Just make a deal with Visa and/or MasterCard to issue a debit card linked to iTunes accounts. I suspect the only reason it hasn't happened is fear of exactly this sort of lawfare.

    This is just executives that have been promoted off the back of the development by underlings of each banks' digital wallet systems fighting a losing war to preserve their credibility, which got superceded.
    edited February 2017 randominternetpersonwatto_cobra
  • Reply 17 of 29
    avon b7avon b7 Posts: 3,065member
    Irrespective of Apple Pay, it would be nice if Apple made the NFC chip available for other uses. 

    As for this particular instance Apple must simply accept that the banks have major reservations about accepting Apple Pay.

    The banks have there own wallet systems.
  • Reply 18 of 29
    anome said:
    Yeah considering Apple espouses sticking to their core elements, I have a harder time seeing them getting into the loathed banking industry than I do cars. Banking isn't a product that makes people happier with their lives. 

    Although one of the Apple principles, as seen with development of the iPhone, is to take something people aren't happy with and try to make it better.

    But I agree, getting into banking is a bad idea for Apple. Keep in mind, this article is about the problems they are having with Apple Pay adoption here, in Australia. A foreign company setting up an Australian bank, while much easier than it used to be, is still a nightmare. And they'd possibly have to do it in every market they operate in. Even establishing a US bank that can then operate in other territories is subject to regulations in each of those territories designed to protect the local banking industry. (And all this is about is protectionism.)

    Do the Swiss still have anonymous bank accounts? Could Apple establish, or partner with, a bank in Zurich, and everyone just gets an account number? It would cause problems with international transaction fees, and conversions to and from Swiss Francs, but it's a possibility...

    I have been a loyal customer of Westpac since before they were Westpac, but I don't trust them to have the best interests of their customers at heart. The problem with banks is, like oil companies, they're all evil, but they've made themselves necessary to modern life. I suppose the trick is to find the option that's the least evil, and, at the moment, it seems I may be on the wrong one.


    Come on.  All banks are evil, and all oil companies are evil?  What part of my local credit union's operation is evil?  Is it the lending of money at low interest rates?  The safe deposit boxes?  The certificates of deposit and checking accounts they provide?  In reality banks (and oil companies) are no more evil than any other enterprise--of a similar size and scope.
  • Reply 19 of 29
    jvmbjvmb Posts: 53member
    Apple Pay should compete on it own merit, not because Apple has a major market share and only allows Apple Pay to be used. Just like bundling internet explorer with windows stalled browser innovation, so too will limiting the iPhone to Apple Pay hurt digital wallet innovation. I am not sure if the Australian banks are creative enough to revolutionize the digital wallet market, but if NFC access is opened up then others might.
    singularity
  • Reply 20 of 29
    I wouldn't necessarily state that all banks are evil.

    However, I would not put faith in the Banks having my best interests at heart when they introduce some new feature.

    Let's face it in Australia, the Touch 'n' Go / Paypass / 'Name of the day' incurs a 1.5% credit transaction fee even when the account is your own savings account and not a credit card. That means, the Bank earns 1.5% of the transaction so I can save sticking the card into the terminal, selecting transaction type and entering my pin. In my case, I weighed up the 1.5% to the time saving and have opted to go the manual route and avoid the fee (the cashier rolling their eyes in annoyance is a bonus).

    That said, I'm not completely against the Banks (or other companies) building out the use of NFC. However, that shouldn't be a free for all. Maybe, Apple should be made to open it up but under a license model (and framework). Then the banks wanting to build a "better" digital wallet can take out the licence and pay Apple for the access, build their wallet and compete.

    Apple gets a return on their efforts and the banks get their access. I'd call that a Win-Win.

    Of course, the Banks won't want to pay for the licence (hence their approach with the ACCC) and if they do have to pay one they'll pass it on anyway (but it may make using their wallet less enticing). 
Sign In or Register to comment.