Australian Banks Tell Apple – It’s About Access to NFC

The group of Australian banks applying to the Australian Competition and Consumer Commission (ACCC) for permission to jointly negotiate over access to Apple Pay and the Near Field Communication (NFC) function on iPhones, have announced they have narrowed the application to solely focus on open access to the NFC function.

In a joint statement on behalf of Bendigo and Adelaide Bank, the Commonwealth Bank of Australia, National Australia Bank, and Westpac, the banks said:

Open access to the NFC function on iPhone is required to enable real choice and real competition for consumers, and to facilitate innovation and investment in the digital wallets available to Australians.  Without open NFC access on iPhone, no genuine competition in the provision of mobile wallets is possible and Apple will have a stranglehold on this strategically important future market.

The four banks making the application – Bendigo and Adelaide Bank, Commonwealth Bank of Australia, National Australia Bank, and Westpac – have responded to concerns raised in the ACCC’s finely balanced draft determination, and proposed to remove from consideration items the ACCC considered may lead to a public detriment.

In the applicants’ response to the ACCC, the applicants have addressed these concerns by removing collective negotiation on the potential to pass-through the additional fees Apple wishes to impose on the payment system (i.e., the requested collective negotiation will be in relation to NFC access alone), and limiting the authorisation term to 18 months – half the original term sought.

Open NFC access would enable the delivery of substantial public benefits to Australian consumers, not just in payments, but across retailing, loyalty programs, building or member lounge security, and other NFC-use cases.  As a result, the applicants have again been supported by nearly all of Australia’s leading retailers, as well as competitors in the provision of payments services to merchants.

The applicants flatly reject Apple’s unsupported assertions that the application is about an objection to the fees that Apple wishes to impose, rather than NFC access.  Apple’s conspiracy theories about “Trojan horse fees” are similarly dismissed by the applicants as fantasy.

Apple recorded over $US7 billion in services revenue, which includes Apple Pay fees, from their customers in the last 3 months of 2016 alone, and hopes to double that over the next four years.  With their services business set to become the size of a standalone Fortune 100 company this year, Apple is the leading expert on deriving fee revenues from iPhone users, not the applicants.

“The applicants are ready, willing, and able to participate in Apple Pay, alongside being able to offer their customers their own mobile wallet products,” payments specialist and spokesperson on behalf of the applicants, Lance Blockley, said.

“This application has always been about consumer choice, and allowing competition between the makers of mobile wallets to offer the best products and features they can to determine which mobile wallet consumers will use.  The applicants want to put up their digital offerings head to head with Apple Pay, and let the market and individual consumers decide which best suits their needs.

“Open access to the NFC function, as occurs on the world’s most popular and widely installed mobile operating system Android, is important not just to the applicants and mobile payments, but to a range of NFC-powered functions across many sectors and uses.  This has global implications for the use of NFC on smart phones.

“The application seeks permission to jointly negotiate with Apple; this is not an attempt to delay Apple Pay from entering the Australian market.  The applicants expect that Apple Pay would be offered to their customers alongside open access to the NFC function.  Any delay or frustration will be as a result of Apple refusing to negotiate.

“Apple is not a bank or a credit card scheme, and Apple cannot on their own complete a mobile payment.  Nor are the applicants manufacturers of mobile phones – both parties need each other to bring strong mobile payment offerings to the market.”

The applicants look forward to the ACCC’s final decision, and believe their submission further demonstrates the net public benefits of the application, and substantially removes any risk of public detriment.

Apple claims banks want digital wallets as a new revenue source

From Australian Fintech.

Apple says three of the big four banks are pushing to pass the costs of Apple Pay on to their customers as a way to “condition the market” into paying extra fees when using a mobile phone to make a ‘tap and go’ payment.

One of the issues in the long-running battle between Apple and Commonwealth Bank of Australia, National Australia Bank, Westpac Banking Corp and Bendigo and Adelaide Bank is whether the banks can pass through to their customers the fee that Apple will require them to pay to use the iPhone infrastructure.

But Apple has described the argument as a “trojan horse”. In a submission published by the Australian Competition and Consumer Commission on Friday, Apple suggests this issue of fees, rather than the bank’s other demand for access to the iPhone’s communication antenna, is motivating the banks, who are all developing their own digital wallets to compete against Apple’s. Digital wallets allow mobile phones to be used to pay through contactless payment terminals.

“Put simply, the applicant banks have the means, notice and opportunity to disadvantage Apple Pay by pricing Apple Pay transactions above transactions made using their own proprietary issuer digital wallets to dissuade cardholders from using Apple Pay,” Apple said. The banks have an “incentive to charge fees to consumers for using Apple Pay to steer customers towards their proprietary payment apps”.

Once the market became accustomed to being charged for using Apple Pay instead of a card, Apple says the banks would be “setting a precedent for charging for mobile payments on other digital wallets, in the future, including the banks’ own proprietary wallets”. The banks could “tacitly extend the imposition of those fees to any digital wallet transaction as a new revenue source,” Apple added.

ANZ deal

ANZ Banking Group broke ranks with the other banks to offer Apple Pay last year; the fee ANZ is paying to Apple has not been confirmed but is understood to be a few cents per $100 of transactions. But ANZ is prevented by its contract with Apple from charging customers for using the service.

The banks’ final submission to the ACCC will be published this week, ahead of the regulator making a decision on the authorisation request, which is expected next month.

Apple said that if authorisation is granted, it will merely provide “cover” for the banks. “The incentive to compete away these fees at the retail level is reduced or removed if there is an ACCC authorised ability to impose Apple Pay transaction fees which provides shelter for their own fees,” Apple said.

Faster credit decisions with real-time technology

From Fintech Business.
Credit providers will need to embrace newer technologies and real-time data processing in order to meet changing client needs, writes Experian’s Suzanne Steele.

Over the last decade, the digital transformation of the banking sector has accelerated dramatically, and the pace of change is showing no sign of slowing.

Recent research data shows more than 1.2 billion people are banking on their mobile devices today, a number set to increase to over two billion by 2021.

Competition from agile new arrivals to the market, combined with a need to enhance the customer experience, are compelling credit providers to improve their range of services and reduce the time it takes to make credit decisions.

Gone are the days when a discussion with the local bank manager was the only option.

Dissatisfaction with traditional systems that fail to meet the instantaneous needs of the modern-day customer already has some Australians looking to fintech start-ups and alternative lending sources.

Millennials report convenience anywhere, any time as the primary driver for choosing non-traditional finance providers, according to recent Telstra research.

This highlights that many of today’s consumers live in a world of digital banking and expect to be able to have their banking needs met at any time, in any place and on any device.

There are signs consumer pressure is shifting the massive cogs of Australia’s financial services industry, slowly but surely adjusting to the demands of today’s hyper competitive 24/7 global economy.

The National Payments Platform (NPP) rollout in late 2017 will provide Australian businesses and consumers with a faster, more flexible and data-rich way to transfer funds within seconds.

In the NPP world, an Australian credit shopper can receive funds from friends, family or peers almost instantly.

Australian credit providers will have the same ability to almost instantly fulfil a customer’s credit wishes, but they will also need the right tools in place to assess customer risk with the same level of immediacy.

In order for credit providers to meet the evolving demands, real-time automated decision-making must become the new norm across the credit industry, enabled by access to a variety of internal and external databases.

What are the databases and insights credit providers need at their fingertips to make well-informed decisions?

In order to accurately, quickly and confidently make a ‘yes’ decision anytime, anywhere, a credit provider needs to first answer these five fundamental questions:

  1. Is the applicant who he or she purports to be? (ID data)
  2. Will the applicant likely be fraudulent? (fraud data)
  3. Is the applicant too risky? (credit data)
  4. Can the applicant afford to repay the loan? (servicing capacity data)
  5. If the applicant has a property, is it worth what they say it’s worth? (asset value data)

Historically most credit providers have answered each of these questions separately, using disparate and unconnected systems. For example, the bank will access an existing customer’s profile on their CRM database, but will also look at external data provided by a credit bureau or a shared fraud database.

The result is a lengthy process that delays credit decisions and results in a poor customer experience. In an increasingly saturated market, consumers’ ability to access credit seamlessly will likely be a key differentiator.

A one-stop shop

Emerging technologies promise a faster and more customer-friendly alternative to these clunky systems of old, offering access to a wide range of separate databases on demand and as part of a singular process.

As banks up the ante in their adoption of cloud-based services, a more flexible, collaborative technology ecosystem is emerging.

These technologies enrich a bank’s own customer data with third-party credit data, identity information, fraud insights and property data, and make it all available online and in real time.

With integrated workflow and decisioning processes, banks can fast track applications from existing customers and prompt a request for more data from new customers.

This enables credit providers to deliver a credit decision within seconds, reducing the number of customers who drop-off midway through the application process due to the lengthy questions and delays.

However, it also ensures credit offers are more accurate, based on a holistic approach to a customer’s financial situation. For the bank, this reduces risk, streamlines operations, and enables it to offer efficient and competitive products and services.

A digitised approach also addresses an ongoing concern for credit providers.

In 2009, to meet ASIC’s responsible lending guidelines, the onus was put on lenders to request evidence such as pay slips or financial statements, to support credit applications.

This process significantly delays the processing of applications. However, by applying the same principles in data integration, banks can now automatically access bank statements to fast track their evaluation of the ability of a consumer to service a loan.

Developing an effective data hub with real-time decisioning software future-proofs a bank, enabling an agile response to both future regulatory changes and transformations to the market.

Such a capability results in a more positive experience for customers and delivers much improved efficiencies and business performance for credit providers.

Suzanne Steele is the managing director of Experian for Australia and New Zealand.

Lost or stolen cards replaced instantly with ANZ digital wallets

ANZ today announced its customers can continue to use their digital wallets when they report their card as lost or stolen with a new service that automatically updates their replacement card details.

As soon as a customer calls to report their debit or credit card as missing, ANZ puts a stop on the original card and automatically uploads the new virtual card details to the customer’s digital wallet.

ANZ Managing Director Products Australia, Katherine Bray said: “Our customers report about 670,000 cards as lost or stolen each year and we know waiting for a new card to arrive can be a real inconvenience.

“Now our customers can keep using their digital wallet, whether it’s Apple Pay or Android Pay, to make purchases while they wait for the new physical card to arrive in the mail.

“For many customers their smartphone is now the primary way they do their banking, including making purchases, so we’re working hard to keep improving their mobile experience with changes like this.”

ANZ has also made it possible for customers to keep their existing Personal Identification Number (PIN), provided it hasn’t been compromised, meaning less change with the same high level of security.

ANZ is the only major Australian bank to offer both Apple Pay and Android Pay with about 8.3 million transactions made across the bank’s digital wallets last year.

US Payments Landscape Changing Fast

From 2012 to 2015, US credit and debit (including prepaid and non-prepaid) card payments continued to gain ground in the payments landscape, accounting for more than two-thirds of all core noncash payments in the United States, according to a Federal Reserve study of U.S. non-cash payments. Automated clearinghouse (ACH) payments grew modestly over the same period, and check payments declined at a slower rate than in the past.

The 2016 Federal Reserve Payments Study, which presents 2015 payments data, found that the number of domestic core noncash payments totaled an estimated 144 billion–up 5.3 percent annually from 2012. The total value of these transactions increased 3.4 percent over the same period to nearly $178 trillion.

Other key findings:

  • Card payments grew 19.9 billion from 2012 to 2015, led by non-prepaid debit card payments which grew by 12.4 billion, and credit card payments, which grew by 6.9 billion. Prepaid card payments grew by less than 1 billion.
  • Remote card payments, sometimes called card-not-present payments, reached 19 percent of card payments in 2015, an increase of less than 4 percent compared with 2012. Gains in remote cards’ share of total card payments were mitigated by substantial growth of in-person card use.
  • Credit card and non-prepaid debit card payments nearly tied for first place in growth by number from 2012 through 2015, both growing by roughly 8 percent over the period.
  • The number of general-purpose card payments initiated with a chip-based card increased substantially from 2012, growing by more than 230 percent per year, but amounted to only a roughly 2 percent share of total in-person general-purpose card payments in 2015, during a broad industry effort to roll out chip card technology.
  • In 2015, the proportion of general-purpose card fraud attributed to counterfeiting was substantially greater as a share of total card fraud in the United States compared with countries where chip technology has been more completely adopted. Nonetheless, the total share of remote fraud is already substantial (46 percent) compared to its share in total card payments (19 percent).
  • The number of ACH payments is estimated to have grown to 23.5 billion in 2015, with a value of $145.3 trillion. ACH payments grew at an annual rate of 4.9 percent by number and 4 percent by value from 2012 to 2015.
  • Check payments fell at an annual rate of 4.4 percent by number or 0.5 percent by value from 2012 to 2015. For the first time since the descent began in the mid-1990s, check payments posted a slowing in the rate of decline.

“The data collected for the 2016 study was substantially expanded,” said Mary Kepler, senior vice president of the Federal Reserve Bank of Atlanta, which sponsored the study.

“This reflects an increased desire within the payments industry for additional fraud-related information,” she said. “A limited amount of fraud information was ready for release today, and further results will be released in 2017 as the complete data set is more fully reviewed and analyzed.”

Beginning in 2017, some survey data will be collected annually, rather than every three years, to enhance the value of the study, Kepler added.

“Payment industry participation drives the quality of the study’s results,” Kepler said. “The Federal Reserve appreciates the industry’s response in 2016 and looks forward to working with selected participants for the annual data collection getting underway in the first quarter of 2017.”

Apple blocks Samsung pay app for iPhones

From IT Wire.

Apple has refused a Samsung pay app for iOS a place in its App Store, according to a report in the South Korean publication, The Economic Times.

Samsung had planned to introduce the app, Samsung Mini Pay, from January and getting it into the app store was the first step in the process.

Samsung had completed testing of the app with some South Korean credit card companies but when it applied for registering the app it received a notice of rejection, the newspaper reported.

No reason was given for the rejection, but the newspaper speculated that it was possible that the app had not met Apple’s policies on security and regulations.

It said Samsung had now decided not to go ahead with the app, and instead concentrate on the Android market with its Samsung Pay app instead.The paper quoted a Samsung Electronics representative as saying, “After Apple rejected registration of Samsung Pay Mini onto its app store, we have decided to focus on Smartphones with Android OS.”

Apple is apparently thinking of launching its own Apple Pay app in South Korea in the first half of 2017, the paper said, adding that the company’s representatives had not provided any indication if this was so when asked.

Samsung Pay, which was launched in August, has so far been used in nine countries. Samsung Pay Mini has been in development for more than a year.

CBA makes another bid to cut Apple Pay deal

From ITWire.

The Commonwealth Bank has attempted, on its own, to break the impasse with Apple over Apple Pay, by offering to pay the tech firm for use of its payment infrastructure.

However, the CBA is still insisting that Apple should give it access to the near field communications controller so that it can set up payments, a demand that Apple is unlikely to grant.

A report in the Australian Financial Review quoted Matt Comyn, the head of retail banking at CBA, as saying the fee that Apple was asking for use of Apple Pay was not the main hurdle to cutting a deal.

He said: “If we could get access to the NFC antenna and our wallet had the same experience [as Apple Pay] on parity, there is no way the interchange fee, as currently contemplated, would be the stumbling block.”

The CBA is currently using a workaround for its iPhone customers to access its payment app, with a sticker that can be placed on the back of the phone to serve as an antenna.The sticker costs $2.99 and Comyn said 400,000 customers had ordered them but the latest numbers showed 600,000 transactions had been made per month.

The CBA, along with Westpac, the National Australia Bank and Bendigo and Adelaide Bank, have been denied permission by the Australian Competition and Consumer Commission to negotiate as a cartel with Apple over Apple Pay.

Apple has repeatedly said it will not allow direct access to the NFC controller.

Dual-Network Cards and Mobile Wallet Technology

The Reserve Bank has today published a consultation paper on dual-network debit cards and mobile wallet technology following discussion of these issues by the Payments System Board at its November meeting.

Dual-network debit cards are debit/ATM cards that allow transactions to be routed through two different networks. They offer convenience for cardholders and enhance the ability of merchants to encourage the use of lower-cost payment methods. Around two-thirds of the debit cards issued in Australia have dual-network functionality.

New technology has enabled mobile devices, such as mobile phones, to be used to make payments via an electronic representation of a payment card, as opposed to a traditional plastic card. The electronic representation of a card is typically contained in a ‘mobile wallet’, which is a software application on a mobile device that enables payments to be made through the card networks. This technology may offer greater convenience for cardholders as it avoids some of the physical limitations of carrying and using multiple plastic cards.

Some stakeholders have recently raised concerns about possible restrictions on competition in the mobile wallet sphere, specifically about conduct that may prevent or make it more difficult for both networks on a dual-network debit card to be enabled on a mobile device. This conduct could have the effect of reducing choice and convenience for cardholders in making mobile payments and reduce the ability of merchants to encourage the use of lower-cost payment methods. This consultation paper discusses these issues and raises a number of specific questions for consultation.

Interested parties are invited to make submissions on the consultation paper by 7 February 2017.

Questions for consultation:

1. What are the views of end-users (cardholders and merchants) regarding dual-network cards, including their use in mobile payments? Are there particular benefits that arise for end-users from having multiple payment networks available on a mobile device? What risks and costs might arise?

2. Are there any impediments or restrictions imposed (or planned or foreshadowed) by card schemes on the mobile wallet provisioning of competing networks on dual-network cards? If so, how significant are these and can they be justified on commercial or other grounds?

3. What are the likely effects – on competition and efficiency in the payments system, as well as more broadly – of the action of any scheme to prevent or discourage the mobile wallet provisioning of a competing network on a dual-network card? Are there benefits for end-users that arise from rules or policies that constrain the provisioning of an additional network on a device?

4. Do cardholders, issuers or others have views as to the feasibility of different possible ways of provisioning dual-network cards?

5. Under the existing voluntary undertakings to the Bank in place since August 2013 (see page 4), schemes have committed to some voluntary principles regarding dual-network cards. Have these principles been an effective response to the competitive issues that arose earlier? Have there been any issues in practice with the operation of these principles? Would an extension of these principles be an appropriate response to the current issues?

6. Are there any foreign precedents that are relevant for the consideration of these issues in Australia?

7. Are the issues raised relevant only to dual-network debit cards or are they also relevant to so-called ‘combo cards’ with credit functionality from one scheme and debit functionality from another?

8. Are there any prospective developments in payment card technology that may be relevant for the Bank as it considers these issues?

9. If the Bank were to contemplate a standard addressing conduct in this area, are there particular compliance costs that would arise for industry?

Dual-network (or ‘co-badged’) cards have attracted the attention of policymakers in a number of other jurisdictions – most notably the United States, Canada and the European Union, with different policy responses. In each case, however, the response has tended to focus on reducing costs to payments system end-users.

In the United States, Section 1075 of the 2010 Dodd-Frank Act, known as the Durbin Amendment, provided for a number of reforms to the debit card market with the intention of providing more competition in the market. One aspect, which came into effect in April 2012, has the effect of requiring that all debit cards be enabled on at least two unaffiliated networks. Networks must also not restrict or limit an issuer’s ability to contract with other networks.

In the European Union, the 2015 regulation on interchange fees makes specific reference to co-badged cards and their role in reducing the cost of payments. The regulation prevents card schemes from having rules that prevent issuers from including payments functionality of two or more networks on one card. It also requires that any scheme rules, routing principles or technical or security standards involving co-badged cards should be objectively justified and non-discriminatory. It specifies that the choice of payment application for transactions using co-badged cards should be made by users, not imposed by card schemes, issuers, acquirers or processing entities.

Individual countries within Europe have different structures with respect to card networks and mobile payments. For example: In Denmark, the domestic debit card system is Dankort; there are also co-badged ‘Visa Dankort’ debit cards. On co-badged cards, domestic transactions are routed via Dankort, while transactions made abroad are routed through the Visa network. In France, Carte Bancaire is the domestic (credit and debit) scheme, often co-badged with MasterCard or Visa, with the latter networks used typically for cross-border transactions and Carte Bancaire used for domestic purchases. In Canada, the Code of Conduct for the Credit and Debit Card Industry in Canada (‘the Code’) explicitly provides for dual-network cards but takes a different approach. It allows for non-competing, complementary domestic applications from different networks to exist on the same debit card but specifies that competing domestic applications from different networks cannot be offered on the same card. In practice, this means that domestic point-of-sale transactions made on co-branded debit cards are processed through one network, in particular the domestic Interac network, while other applications such as on-line payments and payments at foreign point-of-sale terminals may be processed through the other network on the card. Contactless payments are also processed via Interac (‘Interac Flash’ transactions). The Code also states that payment card networks must ensure that co-badged debit cards are equally branded. All representations of payment applets in a mobile wallet or mobile device, and the payment card network brands associated with them, must be clearly identifiable and equally prominent.

Cardholders in Canada are now able to provision non-competing domestic networks on dual-network cards for mobile use. Although there is no unifying precedent so far regarding how public policy will evolve regarding mobile payments and dual-network cards, many authorities recognise the benefits of competition among different schemes and have sought to avoid artificial restrictions on competition. A press release from the European Commission in June this year indicates its expectation that dual-network card functionality will be available in both physical and mobile forms.7 In particular, the Commission noted that under its new interchange fee regulation, consumers will be able to require their bank to co-badge a single card (or in the future their mobile phone) with any card brands that they issue to the consumer.

ANZ Launches BladePay

ANZ today officially launched its secure payments system for business customers, ANZ BladePay, alongside six point-of-sale vendors who are developing customised applications for the platform.


Developed in partnership with tech innovation firm ThumbzUp, ANZ BladePay is a handheld android-based payment device which is capable of integrating third party applications designed to help businesses run more efficiently and enhance customers’ experience.

ANZ Group Executive, Australia Fred Ohlsson said: “We are routinely told that managing payments is one of the biggest pain points for business owners, yet when we looked at the market we found an opportunity to create a platform that could dramatically change the way our customers do business.

“ANZ BladePay is a fully integrated and innovative solution that will simplify business operations. What really sets ANZ BladePay apart is the software our vendor partners are developing, which is tailored to our customers’ needs. ANZ BladePay is much more than a secure payments solution, its potential is limitless,” Mr Ohlsson said.

Our vendor partners can build applications to include features such as ‘order and pay at table’, split bill and tipping options, ability to email and SMS receipts, and staff shift clock-on functions.

The device will be available to the hospitality industry in March 2017, with it offered to retail and B2B shortly after.

To take advantage of ANZ BladePay, business owners need to be an ANZ merchant customer and use a point-of-sale system provided by one of the banks vendor partners.

Point-of-sale vendors NCR, RedCat, H&L, SureFire, Abacus and Shout for Good have all started developing software for the device. ANZ is actively working with a number of other vendor partners.

ANZ BladePay features:

  • Android 6.0 Marshmallow operating system
  • Open architecture platform
  • 5″ high resolution display
  • Dual Cameras: 8MP rear facing/ 2MP front facing
  • WiFi and 4G enabled Includes 1/2D barcode scanner
  • Customised home screen with preferred applications
  • Micro USB cable for charging

Banks Blocked From Collective Bargain With and Boycott Of Apple on Apple Pay

The Australian Competition and Consumer Commission has issued a draft determination proposing, on balance, to deny authorisation to the Commonwealth Bank of Australia, Westpac Banking Corporation, National Australia Bank, and Bendigo and Adelaide Bank (the banks) to collectively bargain with and boycott Apple on Apple Pay.


The banks sought authorisation to bargain with Apple on two key issues:

  • access to the Near-Field Communication (NFC) controller in iPhones. Such access would enable the banks to offer their own integrated digital wallets to iPhone customers in competition with Apple’s digital wallet without using Apple Pay
  • removing restrictions Apple imposes on banks preventing them from passing on fees that Apple charges the banks  for the use of its digital wallet.

“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.

The banks argue that being able to engage in the proposed conduct will increase the likelihood of being able to offer competing wallets on the iOS platform and pass through Apple fees, which would lead to the following public benefits:

  • 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
  • increased pricing efficiency in digital wallets.

“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,” Mr Sims said.

The applicant banks have yet to reach agreement with Apple over deals to enable their cardholders to use Apple Pay. Apple does not allow the banks, or any entity, direct access to the NFC to allow them to offer their own integrated digital wallet to iPhone users.

“However, 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,” Mr 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.”

The ACCC is concerned that the proposed conduct could reduce or distort competition in a number of markets.

The conduct would reduce the competitive tension between the banks individually negotiating with Apple, which could reduce competition between the banks in the supply of mobile payment services for iPhones.

“Apple Wallet and other non-bank digital wallets could represent a disruptive technology that may 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,” Mr Sims said.

There may also be detriments to competition in digital wallets arising from the proposed conduct. Authorisation would allow the banks to agree not to sign up to Apple Pay for three years. This is a significant period of uncertainty and would result in decreased choice for consumers whose banks engage in this conduct.

The ACCC considers that the conduct could also distort competition between mobile operating systems. Apple’s iOS platform is a differentiated offering that competes globally against other operating systems, such as Android. One of the features each system provides to consumers is mobile payment services and digital wallets. To the extent that the proposed conduct leads to an alteration of the offering that Apple is able to make available on the iOS platform, the proposed conduct distorts competition between these operating system providers.

The ACCC is seeking submissions on its draft determination before making a final decision.


A ‘digital wallet’ is an app on a mobile device that can provide a number of the same functions as a physical wallet, including the ability to make payments in-store and storing other information, such as loyalty or membership cards. A ‘mobile payment’ is a payment performed in-store using a digital wallet.

On 26 July 2016, the banks sought authorisation on behalf of themselves and other credit and debit card issuers to engage in limited collective negotiation and limited collective boycott conduct. The banks have since clarified that they only wish to collectively negotiate with Apple in relation to specified issues regarding NFC access on iPhones, reasonable access to the App Store for their digital wallets, and the ability to pass through Apple Pay fees.

On 19 August 2016 the ACCC decided not to grant interim authorisation to the applicants.

Currently only consumers with eligible payment cards issued by ANZ and American Express are able to use Apple Pay. Cuscal Ltd, on behalf of 31 issuers, recently reached agreement with Apple to offer Apple Pay.

Authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010. Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit resulting from the conduct outweighs any public detriment.

The ACCC will conduct further public consultation with interested parties regarding its draft determination. The applicants or interested parties may call a ‘conference’ to make oral submissions to the ACCC about the draft decision.

The banks have undertaken to agree to an extension to the statutory six month period for assessment, because of the additional time for the banks and interested parties to make submissions and for the ACCC to consider those submissions. The ACCC has decided to extend the statutory period for an additional three months.

The ACCC expects to release its final decision in March 2017.