Apple predicts its system that turns iPhones into "digital wallets" can unleash a new round of competition between banks on credit cards, pushing lenders to offer shoppers more perks for paying on credit.
As part of a bitter fight with four local banks over Apple Pay, a new submission from Apple say its payment system should prompt lenders to offer their customers more promotions, such as cash-backs or bonus frequent flyer points.
More BusinessDay Videos
- Video duration
- 01:00
Banks, Apple in stoush over digital ...
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.
Up Next
Tigerair permanently cancels Bali flights
- Video duration
- 00:48
- Video duration
- 00:48
Tigerair permanently cancels Bali flights
Tigerair permanently cancels Bali flights
CEO Rob Sharp announces Tigerair Australia will stop flights to Bali after an impasse with Indonesia over charter flight regulations.
Up Next
Seven clears CEO of wrongdoing
- Video duration
- 00:49
- Video duration
- 00:49
Seven clears CEO of wrongdoing
Seven clears CEO of wrongdoing
Seven West Media clears CEO Tim Worner of wrongdoing after allegations of misconduct were raised last year by former employee Amber Harrison.
Up Next
Lower growth, less revenue
- Video duration
- 03:26
- Video duration
- 03:26
Lower growth, less revenue
Lower growth, less revenue
Leading Australian economists are more pessimistic about the Australian economy than the official Treasury position. Peter Martin explains.
Up Next
Timezone set to expand
- Video duration
- 01:39
- Video duration
- 01:39
Timezone set to expand
Timezone set to expand
It's been around since 1978, is in six countries and has 182 stores, and now it's set to get bigger.
Up Next
Marcs, David Lawrence in voluntary administration
- Video duration
- 00:22
- Video duration
- 00:22
Marcs, David Lawrence in voluntary ...
Marcs, David Lawrence in voluntary administration
The companies behind fashion brands David Lawrence and Marcs have been placed in voluntary administration. Vision courtesy ABC News 24.
Up Next
Billionaire reported kidnapped in Hong Kong
- Video duration
- 01:02
- Video duration
- 01:02
Billionaire reported kidnapped in Hong ...
Billionaire reported kidnapped in Hong Kong
Xiao Jianhua's family reported he was kidnapped from Hong Kong and taken to mainland China.
Up Next
Tintin and the rocker: meet the incoming RBA bosses
- Video duration
- 01:44
- Video duration
- 01:44
Tintin and the rocker: meet the incoming ...
Tintin and the rocker: meet the incoming RBA bosses
Philip Lowe and Guy Debelle are the unlikely duo taking the reins at the Reserve Bank of Australia.
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.
It says this is likely because Apple Pay, which allows tap-and-go payments on the iPhone, also makes it easy for customers to quickly switch their "default" card used for payments on the iPhone, and go to a rival if there is a better deal on offer.
In the United States, Canada and the United Kingdom, Apple says lenders have competed more aggressively for customers by offering deals to entice people to use the bank's card in Apple Pay.
The types of perks included extra frequent flyer points, discounts on shopping, or cash-backs, it said, pointing to offers from big foreign banks such as Citi, Wells Fargo, Chase Bank and UK lender TSB.
"Apple expects that, with a range of payment cards available in [its] wallet [product] in Australia, the same increase in competition is likely to occur in Australia as has been evident in these other jurisdictions," the submission said.
Apple also argued its system would allow smaller lenders to better compete with banks in the card market, because they had less resources to develop their own digital wallets.
A perceived lack of competition in credit cards has been a concern for government, with Treasury last year saying banks did not compete fiercely on credit card interest rates.
Apple's prediction is included in a new submission the technology giant, published on Friday, as part of its long-running fight with Westpac, National Australia Bank, Commonwealth Bank and Bendigo Bank, over Apple Pay.
The banks are seeking permission from the Australian Competition and Consumer Commission to team up in their talks with Apple and launch a collective boycott of Apple Pay, but the draft ruling went against the banks last year.
ANZ Bank has broken from its rivals and is offering its customers Apple Pay, as are several smaller lenders.
In a fight where both sides are immensely powerful, and both claim their actions will benefit consumers, ACCC chairman Rod Sims said in November the decision was "finely balanced'. A final decision is expected next month.
One reason Mr Sims leaned in Apple's favour was that he believed non-bank digital wallets could become a "disruptive technology" that could boost competition by making it easier for customers to switch card providers, and not get locked into banks' own digital wallets.