A push from several of the country's biggest banks to gain unprecedented access to the digital payment chip on Apple's iPhone has been dealt a major blow by the competition watchdog.
As banks and technology giants jostle to dominate the market for digital wallets, Westpac, Commonwealth Bank, National Australia and Bendigo and Adelaide Bank had sought permission from regulators to team up in their negotiations over the digital payment service, Apple Pay.
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Banks, Apple in stoush over digital wallets
A draft decision from the ACCC denies several of the big banks from negotiating as a bloc with Apple for access to its NFC technology.
On Tuesday, the Australian Competition and Consumer Commission knocked back the banks' request to launch a collective negotiation and a boycott of Apple Pay, in what it says is a "finely balanced" draft decision. It will make a final ruling in March.
The rejection is a setback for the banks' world-first attempt to apply more negotiating pressure to Apple over its payment service, which is competing with banks for about $2 billion in Australian credit card fee revenue.
With customers tipped to increasingly use phones as wallets, the four banks had argued that if they could team up in talks with Apple, consumers would be the ultimate winners.
They claimed that the boycott would allow the banks to pressure Apple to provide external parties with access to its near-field communications (NFC) hardware – the chip that allows contactless payments to be made with an iPhone. That would give consumers a wider choice of digital wallets, the banks claimed.
Unlike Google, Apple only allows apps to access the NFC chip on iPhones if they sign up to Apple Pay, which requires banks to surrender some of their credit card revenue.
However, the regulator said such benefits were uncertain, while there would be clearer costs to consumers from allowing rival banks to team up.
![Allowing banks to team up in Apple Pay negotiations would reduce competition to provide the payment services customers ...](/web/20161202052706im_/http://www.theage.com.au/content/dam/images/g/l/2/7/q/8/image.related.articleLeadwide.620x349.gszmmm.png/1480401582607.jpg)
Apple does not allow any entity around the world to access the iPhone's NFC hardware in the way the banks want, and it has said it will not change its approach in Australia.
"This is currently a finely balanced decision. The ACCC is not currently satisfied that the likely benefits from the proposed conduct outweigh the likely detriments," ACCC chairman Rod Sims said.
He said the onus was on the banks to prove the benefit of collective bargaining, and this was difficult, there were so many unknowns in the fast-evolving world of digital payments.
Banks are all seeking strong growth in digital payments, and earlier this year ANZ broke ranks with its rivals to become the first major bank to offer Apple Pay to its customers. ANZ says the move has delivered it strong growth in deposits but it says the contract with Apple prevents it from revealing the number of customers using the service.
Payments business Cuscal has also reached an agreement with Apple Pay, which means the service is offered by various smaller lenders.
A spokesman for the banks, payments expert Lance Blockley, said the lenders would make further arguments to the ACCC.
"Whilst we are disappointed with this draft result, our application is not just relevant to Australia – the same issues around consumer choice and the freedom to offer genuine competition against Apple Pay arise globally," Mr Blockley said.
Apple said the company looked forward to working with Australian banks to provide Apple Pay to customers.
"We are focused on offering the easiest, most secure and private payment experience possible, and millions of Apple Pay users from 3500 banks in 12 countries enjoy that today," a spokesman said.
The ACCC said if it had allowed the banks to team up, it would reduce the competitive pressure on banks to supply mobile payments services that customers wanted.
Non-bank wallets, such as Apple Pay, could also end up being a "disruptive" technology that would put more pressure on banks by making it easier to switch card providers, it said.