It really was fun to watch Australia’s four big banks sweating and trying to win a legal battle against Apple for its proprietary payment technology Apple Pay.
They tried every which way to Sunday, to convince the esteemed bench that they ought to have access to Apple Pay, but in turn all they received was a facepalm.
It had to be a tough battle when big names like Commonwealth Bank, Westpac, National Australia Bank and Bendigo & Adelaide are involved. The four banks collectively control two-thirds of Australia’s credit card market!
Now, since the question would be burning in your head – the banks wanted Apple to grant them access to its contactless payment technology so as to avoid paying commission to Apple for charges made through Apple Pay.
However, the Australian Competition & Consumer Commission (ACCC) has made it clear that banks cannot force the demand of their own digital wallets (integrated within their individual apps) on Apple.
The Near Field Communication (NFC) based technology allows iPhone users to settle their payments from their phones, and the money gets deducted from the bank card which is registered with Apple Pay.
So each time an iPhone user makes a transaction, Apple gets fees for it.
No doubt, the stakes were high for Apple as being on the losing end would have meant severe blow to it’s profit margins. In a way, the banks wanted Apple to function more like Google in terms of its method of payment – Google allows contactless payment from individual apps.
So far the banks have prevented their customers from using Apple Pay until the company agreed to give them access to iPhone payment technology. The threat to Apple was seen as a tool to “reduce or distort competition”, Rod Sims, Chairman of the ACCC explained that “it is a tricky issue for competition regulator to force one competitor to adopt a strategy of other competitor”.
So where do banks stand now?
Let’s be real, the four banks (and thus other Australian banks too) have lost the pressure they had built on Apple. Now they can only individually negotiate with the company.
Plus, if they still refuse their customers to make payments through Apple Pay, then they face the risk of decrease in number of account holders.
It’s not surprising that the banks are “disappointed”.
Also published on Medium.