Australia's banks denied right to boycott Apple Pay
Commonwealth Bank, Westpac, National Australia Bank and Bendigo and Adelaide Bank have had their request denied over Apple Pay by the Australian Competition and Consumer Commission. They had asked if they could collectively bargain with Apple to let iPhone users make mobile payments from their own digital wallets, instead of Apple Pay. The Australian regulator's chairman Rod Sims said the watchdog was worried the bank's proposal was “likely to reduce or distort competition” in several markets.

Australia’s competition regulator has rejected a request by four banks that they be allowed to collectively bargain with Apple to let iPhone users make mobile payments from their own digital wallets, rather than Apple Pay.

The Australian Competition and Consumer Commission chairman, Rod Sims, said the watchdog was concerned the proposed move by Commonwealth Bank, Westpac, National Australia Bank, and Bendigo and Adelaide Bank was “likely to reduce or distort competition” in several markets.

The ACCC’s final decision on Friday is in line with its draft ruling on 29 November.



The four banks applied in July to negotiate as a collective over the use of Apple Pay, which allows touch-and-go payments on iPhones.

The banks had argued that Apple Pay prevented them from developing their own integrated digital wallets for iPhones, which they said would increase competition and consumer choice in Australia.

Restrictions on passing fees associated with Apple Pay on to customers were also a sticking point.

But the regulator rejected the application, meaning each bank will have to reach an individual agreement with Apple before its customers can use Apple Pay.

The ACCC said it accepted that allowing the banks to negotiate collectively and potentially boycott Apple Pay would place them in a better bargaining position with Apple, but that the benefits for customers were “currently uncertain and may be limited”.

It said reductions in competition caused by allowing the banks to collectively negotiate would be significant, and three likely detriments stood out in particular.

“First, Apple and Android compete for consumers providing distinct business models,” Sims said. “If the applicants are successful in obtaining NFC [near field communication] access, this would affect Apple’s current integrated hardware-software strategy for mobile payments and operating systems more generally, thereby impacting how Apple competes with Google.

“Second, digital wallets and mobile payments are in their infancy and subject to rapid change. In Australia, consumers are used to making tap-and-go payments with payment cards, which provide a very quick and convenient way to pay. There is also a range of alternative devices being released that allow mobile payments; for example, using a smartwatch or fitness device. It is therefore uncertain how competition may 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,” Sims said.

The conduct was also likely to reduce the competitive tension between the banks in the supply of payment cards.

“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.

ANZ, American Express and Cuscal, which represents 31 issuers, had reached previous agreements with Apple over Apple Pay in Australia.

