ACCC draft determination denies Australian banks' bid to bargain or boycott Apple Pay

This is a discussion on ACCC draft determination denies Australian banks' bid to bargain or boycott Apple Pay within the Australia and NZ Dedicated Apple Forum forums, part of the Regional Apple Forums category; In a draft determination issued on Tuesday local Australia time, the Australian Competition and Consumer Commission denied the country's big-three banks authorization to collectively negotiate ...

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    ACCC draft determination denies Australian banks' bid to bargain or boycott Apple Pay




    In a draft determination issued on Tuesday local Australia time, the Australian Competition and Consumer Commission denied the country's big-three banks authorization to collectively negotiate access to Apple Pay NFC technology.

    Today's proposal denies an application to negotiate terms regarding Apple Pay deployment and services lodged by the Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corp, along with Bendigo and Adelaide Bank, in July.

    A number of contingencies were included in that request to bargain, chief among them being access to iPhone's NFC controller. With access to vital communications hardware the banks would be able to field their own digital wallet systems on iPhone devices, a move they argued would bring competition to the space.

    In addition, the request asked permission to negotiate a potential removal or modification of restrictions that prohibits financial institutions from passing Apple Pay transaction fees to consumers.

    "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," said ACCC Chairman Rod Sims. "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 banks in a statement to AppleInsider promised to work with the ACCC to address issues raised in the draft determination to provide competition and choice for their customers. If the proposal stands, Australian iPhone owners will have only one mobile wallet option —Apple Pay —while the Australian payments industry will be denied the opportunity to innovate and compete with Apple, the banks contend.

    "If the draft determination of the Australian competition regulator stands, effectively there will be no competition against Apple for mobile payments on the iPhone," said Lance Blockley, a payments specialist and speaking on behalf of the bank collective. "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."

    Backing the banks are filings in support of joint negotiations from various retailers and payments associations dating back to August.

    The ACCC complaint was lodged eight months after Apple Pay launched in Australia last November through a limited partnership with American Express. Major bank ANZ was first to break rank and partner with Apple in April.

    For its part, Apple called the banks' threatened boycott a detriment to consumer choice that would ultimately hinder mobile wallet adoption and innovation. The banks, Apple says, are looking to stall consumer adoption of Apple Pay and other mobile wallet solutions with onerous authorization stipulations, a process that stifles competition.

    While the parties have yet to reach an amicable agreement over Apple Pay, the ACCC notes banks can already offer digital wallet solutions on iPhone without accessing the NFC module, through their own apps with Apple Pay integration, or with the use of NFC tags. Further, banks can choose to offer similar payments services on Google's Android operating system.

    Contrary to the banks' argument for negotiations, the Australian antitrust watchdog has determined Apple Pay might actually spur competition in the burgeoning digital payments space.

    "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," Sims said.





    11-29-16

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    Apple Pay Is Likely to Win This Big Victory in Australia




    Some of the country’s biggest banks are looking to offer their own digital wallets on iPhones.

    Australia‘s antitrust regulator said on Tuesday it is likely to deny four local banks permission to collectively bargain with Apple AAPL -0.76% in relation to its mobile digital payments system.

    But the preliminary decision was “finely balanced” and could be reversed if the banks make a convincing case before a final opinion is due in March, Australian Competition and Consumer Commission Chairman Rod Sims told Reuters.

    Losing the case would be a setback to the banks’ hopes of bypassing Apple’s in-house payments system and rolling out their own iPhone versions free of competition from the Silicon Valley giant, which has the biggest smartphone market share in Australia.

    Under Australian law, bargaining cartels can be formed as long as they have permission from authorities, and the banks are seeking the ability to offer their own digital wallets in Apple iPhones – the first major challenge to Apple Pay of its kind.

    Commonwealth Bank of Australia CMWAY 0.12% , Westpac Banking WEBNF 1.11% , National Australia Bank NASXF 9.60% , and smaller rival Bendigo and Adelaide Bank BXRBF -8.21% also want to bargain with Apple over charging customers extra fees for transactions made through Apple Pay.

    A successful application would allow the banks – which jointly have two-thirds of the Australian credit card market – to collectively boycott Apple Pay for up to three years as a negotiating tactic.

    Apple has argued that third parties should not have access to its digital wallet technology because it would undermine customers’ privacy and data security. The company’s representatives did not immediately respond to requests for comment on Tuesday.

    Apple Pay allows users to register credit cards on devices such as iPhones, and pay for goods and services by swiping the devices over contactless payment terminals. Apple charges card providers for transactions via the service, which it introduced to Australia last year.

    In their application, the banks argue that there is an information imbalance weighted in Apple’s favour due to the secret nature of the terms Apple has agreed with competitors over the use of Apple Pay, including fees.

    Sims said that if the ACCC determines that the heart of the banks’ complaint lies with fees, then it would be difficult for them to win the case. But if it is more about access to Apple’s contactless payment technology, then they had a stronger case.

    A representative for the banks behind the application, Lance Blockley, said there would be effectively no competition against Apple for mobile payments on the iPhone if the draft determination stood. The banks would continue to argue their case with the ACCC, he said.

    Australia and New Zealand Banking Group ANZBY 0.19% is the only one of Australia‘s “Big Four” banks to have a digital wallet agreement with Apple, betting that being one of the first to offer the service would help bring in more customers.





    12-1-16

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