ACCC denies Australian banks to collectively bargain, boycott over Apple Pay
The Australian Competition and Consumer Commission on Friday local time issued a determination denying the country's big-three banks authorization to collectively negotiate with Apple over access to Apple Pay NFC technology.
Today's decision follows an initial draft determination that denied a proposal to negotiate filed by the Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corp, along with Bendigo and Adelaide Bank.
"The ACCC is not satisfied, on balance, that the likely benefits from the proposed conduct outweigh the likely detriments. We are concerned that the proposed conduct is likely to reduce or distort competition in a number of markets," ACCC Chairman Rod Sims said.
Sims went on to say that while the ACCC acknowledges the fact that granting the banks authorization would put them in a better position to bargain, the "benefits would be outweighed by detriments."
First lodged last July, the three Australian banks initially requested approval to collectively negotiate the installation of non-Apple Pay software on iPhone hardware. Among the contingencies tied to the bargain was a stipulation that would allow the banks access to iPhone's NFC controller, a key piece of communications hardware that Apple has kept under lock and key.
For its part, the banking bloc argues access to iPhone's NFC would foster increased competition and consumer choice, as well as accelerated innovation and investment in the digital wallet space. As a result of opening the technology, consumer adoption of mobile payment platforms would increase, the group says.
While the ACCC agrees on the point of increased competition, the regulatory body noted three distinct drawbacks to the banks' demands. First, access to iPhone NFC hardware would disrupt the company's integrated hardware-software strategy, thereby impacting how Apple competes with rival Android handsets.
Since mobile payment platforms are relatively new to Australia, a steady stream of alternative devices like smartwatch and fitness wearable products are constantly making their way to market. The ACCC says the presence of these new device form factors makes it difficult to gauge how competition might develop in the future.
Sims notes that granting access to iPhone hardware assets might artificially skew development of payments technologies toward NFC, prematurely killing off other burgeoning innovations.
"Finally, Apple Wallet and other multi-issuer digital wallets could increase competition between the banks by making it easier for consumers to switch between card providers and limiting any 'lock in' effect bank digital wallets may cause," Sims said.
In a statement provided to AppleInsider, the banks expressed their disappointment in the final determination and said they will individually review how best to move forward.
"This case has always been about consumer choice," said banks spokesman Lance Blockley. "The applicants made this application to seek to ensure they could participate in the future of mobile wallets, and not have the course of development for mobile wallets in Australia dictated by a single overseas corporation."
While current digital wallet technology deals mainly with retail transactions, ongoing development points toward future innovations that could replace all physical wallet assets, Blockley says. For example, certain payments platforms, including Apple Pay, allow users to purchase mass transit tickets and access to other venues. Alternative solutions feature support for loyalty programs and even personal identification.
"Apple has a stated desire to own the entire mobile wallet, and will use the beachhead into mobile wallets afforded to them by complete control over mobile payments on iPhone to exert control over the rest of the digital wallet," Blockley said. "This in our view is aimed at increasing the services revenue they can earn from iPhone users."
Today's decision follows an initial draft determination that denied a proposal to negotiate filed by the Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corp, along with Bendigo and Adelaide Bank.
"The ACCC is not satisfied, on balance, that the likely benefits from the proposed conduct outweigh the likely detriments. We are concerned that the proposed conduct is likely to reduce or distort competition in a number of markets," ACCC Chairman Rod Sims said.
Sims went on to say that while the ACCC acknowledges the fact that granting the banks authorization would put them in a better position to bargain, the "benefits would be outweighed by detriments."
First lodged last July, the three Australian banks initially requested approval to collectively negotiate the installation of non-Apple Pay software on iPhone hardware. Among the contingencies tied to the bargain was a stipulation that would allow the banks access to iPhone's NFC controller, a key piece of communications hardware that Apple has kept under lock and key.
For its part, the banking bloc argues access to iPhone's NFC would foster increased competition and consumer choice, as well as accelerated innovation and investment in the digital wallet space. As a result of opening the technology, consumer adoption of mobile payment platforms would increase, the group says.
While the ACCC agrees on the point of increased competition, the regulatory body noted three distinct drawbacks to the banks' demands. First, access to iPhone NFC hardware would disrupt the company's integrated hardware-software strategy, thereby impacting how Apple competes with rival Android handsets.
Since mobile payment platforms are relatively new to Australia, a steady stream of alternative devices like smartwatch and fitness wearable products are constantly making their way to market. The ACCC says the presence of these new device form factors makes it difficult to gauge how competition might develop in the future.
Sims notes that granting access to iPhone hardware assets might artificially skew development of payments technologies toward NFC, prematurely killing off other burgeoning innovations.
"Finally, Apple Wallet and other multi-issuer digital wallets could increase competition between the banks by making it easier for consumers to switch between card providers and limiting any 'lock in' effect bank digital wallets may cause," Sims said.
In a statement provided to AppleInsider, the banks expressed their disappointment in the final determination and said they will individually review how best to move forward.
"This case has always been about consumer choice," said banks spokesman Lance Blockley. "The applicants made this application to seek to ensure they could participate in the future of mobile wallets, and not have the course of development for mobile wallets in Australia dictated by a single overseas corporation."
While current digital wallet technology deals mainly with retail transactions, ongoing development points toward future innovations that could replace all physical wallet assets, Blockley says. For example, certain payments platforms, including Apple Pay, allow users to purchase mass transit tickets and access to other venues. Alternative solutions feature support for loyalty programs and even personal identification.
"Apple has a stated desire to own the entire mobile wallet, and will use the beachhead into mobile wallets afforded to them by complete control over mobile payments on iPhone to exert control over the rest of the digital wallet," Blockley said. "This in our view is aimed at increasing the services revenue they can earn from iPhone users."
Comments
Now Apple do your work and get this stuff rolling down here !!
Signed: a pissed-off antipodean.
And yet, they released a new version of their iOS app complete with a Keyboard extension so you can make payments from other apps. Still no Apple Pay, though.
They just want to go where the money is. The money at the moment is in getting as much information about transactions as possible, and Apple Pay doesn't allow that.
I'm thinking more and more they're going to capitulate, but they're going to drag it out as long as possible. If they drag it out long enough, maybe I'll get around to jumping to ANZ instead.
If the banks want to compete with Apple, they can make their own smartphone.
The ruling isn't about whether Apple should open up access to the NFC chip. It's about whether the banks can negotiate as a bloc. As such, the actual technology is not in question, just the business practices around that technology.
The actual negotiation between Apple and the banks, regardless of the form it takes, will be about sorting out opening up access (or not). That may be referred to the ACCC separately, if the banks can convince them that Apple are operating anti-competitively.
Even if the other banks turn around and start supporting Apple Pay after you make the switch they deserve to have lost as many customers as possible for treating their customers like their product and focusing on how they can make more money out of us rather than providing us with a better experience. They are like the Google of the banking world.
The banks here in Aus behave in a manner not far removed from organised scammers. They routinely defraud customers in the insurance and investment spaces and then when caught out, deny culpability and drag out the legal processes until the victims are exhausted (financially and emotionally). And the conservative (believe it or not, they call themselves Liberal here) government works principally for them and other big companies and against the broad public interest and refuses to hold an official inquiry (Royal Commission) into their behaviour.
So its good to finally see them lose something, especially to Apple. Last thing I would want to see is this mob compromise iPhone security with their incompetence, stupidity and avarice...
You think companies would stop using this line considering they only use it when promoting some government policy that would allow them to screw over consumers. It's the same line the telecoms and Republicans in the US keep regurgitating to justify abolishing internet privacy and net neutrality protections.
The ACCC chairman nailed it:
"Other issues in particular stood out, according to Mr Sims:
- Apple and Android compete for consumers with distinct business models. If the banks were successful in obtaining access to tap-and-go smartphone technology, it would affect Apple's integrated hardware-software strategy for mobile payments and operating systems more generally and impact how Apple competed with Google, the consumer watchdog said.
- Digital wallets and mobile payments were in their infancy and subject to rapid change. While consumers were used to making tap-and-go payments with payment cards, there was a range of alternative devices for mobile payments such as using a smartwatch or fitness device. Access to the technology in iPhones for the banks was "likely to hamper the innovations that are currently occurring" for mobile payments and could reduce the competitive tension between the banks in the supply of payment cards, the ACCC found.
- Apple Wallet and other multi-issuer digital wallets could increase competition between the banks by making it easier for consumers to switch between card providers and limiting any "lock-in" effect that bank digital wallets might cause, the watchdog said."
http://www.theage.com.au/business/banking-and-finance/banks-lose-battle-to-band-together-against-apple-20170330-gvaj4i.htmlI don't think I've ever come across an industry watchdog with such a firm understanding of technology, and the group mentality of the industry they're watching.
Apple came up with their ApplePay solution as a way to keep its users financial transactions secure and eliminate fraud. ApplePay has proven that. It was so good, that countless banks have essentially contracted with Apple to handle all the security issues so the bank doesn't have to deal with the old ways of getting credit cards numbers stolen/hacked and having to pay out billions of dollars in fraudulent charges. Banks love ApplePay.
I have zero faith in a bank's ability to safeguard my credit card information. Zero. They've convinced me after the umpteenth time I had to receive a new credit card (from Bank of America) due to some hacking incident. I'm tired of them. I have 100% faith in Apple's ability to do just that.
I'm using ApplePay more and more, and I just love that my credit card, and number has not been used whatsoever. 100% secure.
And these Australian asshats think they can do better than Apple? Screw them. Good call with the ACCC. They saw the smoke that characters like Blockley was blowing out his ass.
If you do, you are ignoring the bank caters to all customers not just iPhone users. The refusal to jump on board Apple Pay is largely commercial. They are fully aware that some users might switch (as you have done) and, at this point at least, they are happy with that as their commercial interests for the future are what really matter. Anyone supporting Apple Pay is feeding Apple Services and it is never really 'free' to the customer as the bank will always factor in the cost to the end user. Nothing new with that, but it means you are perfectly happy with paying for the 'convenience' of Apple Pay.
That's all up to you but slamming the banks for protecting their own interests is a little harsh. Especially when iPhone users possibly don't even make up the majority of customers in the first place.