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Apple Oz Happy, As ACCC Puts Mockers On Banks’ Demands

Apple Australia has hailed yesterday’s draft decision by the Australian Competition and Consumer Commission to tentatively reject a move by four Australian banks to form a cartel to negotiate with Apple over its Apple Pay technology.

The banks appear to be seeking direct access to Apple’s near-field communication controller – and also gaining permission to  use the Apple technology while avoiding the fees the US company charges for Apple Pay services.

Said Apple Oz yesterday: “We are focused on offering the easiest, most secure and private payment experience possible, and millions of Apple Pay users from 3500 banks in 12 countries enjoy that today.

“We believe today’s draft decision is great for Australians and we look forward to continuing to work with individual banks in Australia and around the world to bring Apple Pay to their customers.”

The ACCC yesterday issued a draft determination proposing to deny the banks’ plans. A final decision is due next March.

The banks – CBA, Westpac, NAB and Bendigo Bank – had sought ACCC authorisation to bargain with Apple on two key issues:

• Access to the near-field communication (NFC) controller in iPhones, enabling them to use it to offer their own integrated digital wallets to iPhone customers in competition with Apple’s digital wallet; and

• Removing restrictions Apple imposes on banks who take up Apple Pay, preventing them from passing on fees that Apple charges for the use of its digital wallet.

Apple currently does not allow banks, nor indeed any entity anywhere in the world, to have direct access to its NFC system – especially not by giving them the right to use the system to offer their own digital wallet in competition with Apple Pay.

ACCC chairman Rod Sims, announcing the draft determination, said banks can already offer competing digital wallets on iPhones without direct access to the NFC. He said the ACCC is concerned that the banks’ proposed conduct could reduce or distort competition.

“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.

“The ACCC considers that the [banks’ proposed] 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.”

Sims said the ACCC is seeking submissions on its draft determination before making a final decision. It expects to release a final decision in March 2017.

• Currently in Australia, only consumers with eligible payment cards issued by the ANZ Bank or American Express are able to use Apple Pay, though Cuscal, acting on behalf of 31 issuers, including a number of credit unions, recently reached agreement to offer Apple Pay services.

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