The worm appears to have turned for the consortium of Australian lenders in their battle with Apple Pay, conceding territory across most previous objections in a submission to the ACCC this week. The one issue that really remains: prying open access to Apple’s coveted Near Field Communications (NFC) tech.
With almost half of the 54-page submission bound by confidentiality, the banks have essentially sought to debunk Apple’s previous arguments (notably as a vehicle of competition), falling back to regroup in a final assault on the gates of the tech-giant’s NFC black box, hidden deep within the proprietary tech, which allows the iPhone to speak to a user’s contactless payment systems.
By paring back the issues, the banks - the Commonwealth Bank, National Australia Bank, Westpac and Bendigo & Adelaide Bank - have all but conceded their previous complaints over transaction fees and other potential distractions to reveal what has been at the core of the ongoing fracas.
The banks are certainly preparing for their Alamo on the issue, with language describing Apple’s submissions as “fundamentally wrong”, “blatantly incorrect” and “misleading.”
In the balance
In what is likely to be the “applicants” final submission before the ACCC hands down its final decision, the banks argued NFC access “enables the delivery of substantial public benefits” to Australian consumers and that the significance of these benefits is greater than that assessed in the Draft Determination.
ACCC Chairman Rod Sims said the “finely balanced decision”, meditated over concerns the conduct could dilute competition.
“The ACCC is not currently satisfied that the likely benefits from the proposed conduct outweigh the likely detriments,” Sims said in handing down November’s draft.
Critically, the banks conceded that everything other than NFC access was irrelevant and are now “factors which the Applicants are willing to remove and limit (as appropriate)".
To underline the banks new position, they waived requests to negotiate collectively on the pass-through of fees, seeking collective negotiation “in relation to NFC access alone".
Such access would enable the banks to offer their own integrated digital wallet - a mobile app that can make payments and store data - to iPhone customers in competition with Apple’s iPhone digital wallet without using Apple Pay.
“NFC access is required to enable real choice and real competition for consumers, and to facilitate innovation and investment in the digital wallets available to Australians. All customers benefit from real competition,” the applicants submitted.
By providing unrestricted NFC access, Australians (via the banks and other financial service providers) would be able to pick and choose their combination of tech, phone, third-party mobile wallets, cards issuer and payments provider, the banks argued.
“These wallets could compete with one another using features such as reward points, specific offers, additional functions, facilities and services, and the like,” the banks argue. “This competition is not possible without NFC access.”
The banks added that the ability to “link” to the Apple Wallet, or to use NFC stickers or similar technology is not a substitute for NFC access, and does not provide the holistic benefits to consumers available through NFC use.
Payments specialist and banks’ spokesperson, Lance Blockley, said the same issues around consumer choice and the freedom to offer genuine competition against Apple Pay arise globally.
“If the draft determination of the Australian competition regulator stands there will be no competition against Apple for mobile payments on the iPhone," said Blockley.
The banks also hit back at “interested party submissions”, accusing Apple of failing to provide any information or evidence to “alter the fact that there are net public benefits of authorisation".
“The application has never been about preventing Apple Pay from coming to Australia or reducing competition between wallets,” Blockley told AB+F. “It has always been about providing consumer choice and innovation."
Apple has said exposing the NFC antenna to the banks is against customers’ wishes, would inconvenience consumers and compromise security.