ACCC denies banks ability to collectively bargain over Apple Pay

After months of back and forth, the Australian Competition and Consumer Commission (ACCC) has today denied authorisation for the Commonwealth Bank, Westpac, National Australia Bank, and Bendigo and Adelaide Bank to collectively bargain with Apple around its Apple Pay service.

The banks had sought permission to bargain as a group with Apple for access to the Near-Field Communication (NFC) controller in iPhones in order to offer their own digital wallet services to customers rather than integrate with Apple Pay.

According to the ACCC, the banks argued that offering their own digital wallets would lead to increased competition and consumer choice in digital wallets and mobile payments in Australia; increased innovation and investment in digital wallets and other mobile apps using NFC tech; and greater consumer confidence, leading to increased adoption of mobile payment tech in Australia.

However Rod Sims, chairman of the ACCC, said in a statement that though the body accepts that collective bargaining would put the banks in a better position to take on Apple, “the benefits would be outweighed by detriments”.

He said, “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.”

An issue is Apple’s competition with Google, with Sims explaining that the banks having their way would “affect Apple’s current integrated hardware-software strategy for mobile payments and operating systems more generally, thereby impacting how Apple competes with Google”.

Also highlighted was the rapid pace of innovation in the mobile payments space, with Sims saying that it is uncertain how competition in this space will develop.

“Access to the NFC 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,” he said.

Apple had argued in its latest submission to the ACCC on the matter that the banking group was concerned less about giving consumers choice and more with avoiding paying the fees associated with Apple Pay.

Lance Blockley, spokesperson for the banks, said the group is “disappointed” with the decision given its “considerable effort” to highlight the public benefits of its aim.

“This case has always been about consumer choice. 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,” Blockley said.

Apple Pay arrived in Australia in late 2015, with ANZ, Macquarie Bank, and ING signing on.

The banks will now individually review their digital wallet strategies.

Image: Rod Sims. Source: beefcentral.