After making this draft determination public, the ACCC said it was seeking submissions before making a final decision.
The banks in question are the Commonwealth Bank of Australia, Westpac Banking Corporation, National Australia Bank, and Bendigo and Adelaide Bank.
ACCC chairman Rod Sims said: “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.”
- access to the Near-Field Communication (NFC) controller in iPhones so that banks could offer their own integrated digital wallets to iPhone customers instead of using Apple’s digital wallet and Apple Pay; and
- removing restrictions that Apple imposes on banks, preventing them from passing on fees that Apple charges the banks for the use of its digital wallet.
The banks argued that this would lead to:
- increased competition and consumer choice in digital wallets in Australia;
- increased innovation and investment in digital wallets and other mobile applications using NFC technology;
- greater consumer confidence leading to increased adoption of mobile payment technology in Australia; and
- increased pricing efficiency in digital wallets.
Sims said: “While the ACCC accepts that the opportunity for the banks to collectively negotiate and boycott would place them in a better bargaining position with Apple, the benefits are currently uncertain and may be limited."
The four banks have yet to finalise deals with Apple to allow their card holders to use Apple Pay.
"Banks can already offer competing digital wallets on iPhones without direct access to NFC, through their own apps using Apple Pay payment technology, or using NFC tags. Banks can also offer digital wallets on the Android platform,” Sims said.
“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. It is, therefore, uncertain how competition may develop with the availability of mobile payments and possible future innovations.”
Reacting to the ACCC draft determination, payments specialist Lance Blockley said, on behalf of the four banks, “If the draft determination of the Australian competition regulator stands, effectively there will be no competition against Apple for mobile payments on the iPhone."
“The application has never been about preventing Apple Pay from coming to Australia or reducing competition between wallets. It has always been about providing consumer choice and innovation.
“Many organisations supported our application with their own submissions, across major retailers, fintech companies and card schemes, and we encourage them to respond to the draft determination with further submissions during the consultation period. The applicants are confident that the proposal would have real benefits and would avoid the detriments of Apple’s conduct, and look forward to the opportunity to provide that evidence to the ACCC.
“While 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.”