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Aussie Banks Like ‘Hardcore Cartel’: Apple Fires Back

Apple has told the Australian Competition and Consumer Commission that the Commonwealth Bank, National Australia Bank, Westpac and Bendigo and Adelaide Bank are acting like a “hardcore cartel” seeking to delay the full arrival of the Apple Pay mobile payments system in the Australian market.

The ACCC yesterday published Apple’s submission to its inquiry into an application by the four banks seeking to act like a cartel in their negotiations with Apple over Apple Pay, in which they seek access to the iPhone’s “near field communication” (NFC) controller, which allows the phone to conduct contactless payments instead of using a plastic card.

In its submission, Apple doesn’t shy from using the “c” word. It says the banks are acting like a “hardcore cartel” and suggested the real reason for their application is to delay Apple Pay’s full arrival in the market in order to direct more customers to their own digital wallets.

Just one bank – the ANZ – has adopted Apple Pay in Australia, agreeing to pay Apple a small, but so far undisclosed, fee on each purchase. It claims the move has been a great success, with iPhone owners flocking to open ANZ accounts.

Says the Apple submission: “The applicant banks say they wish to offer their own wallets and Apple Pay to their cardholders side-by-side on iPhone. Because they consider Apple Pay competitive to their own wallets, they have a clear incentive to charge cardholders explicitly for Apple Pay transactions and not for their own mobile wallet payments … this would result in a strong disincentive for cardholders to use Apple Pay.”

None of the four applicant banks – whose customers comprise around 70 per cent of all cardholders in Australia – has conducted any serious negotiations with Apple over the past two years, Apple says.

It adds: “The only plausible explanation … is that they are not interested in promoting competition in mobile payments, but instead would prefer a situation where the only payment apps available to consumers in Australia are the banks’ own proprietary apps.

“Why? Because Apple Pay, Android Pay, and Samsung Pay have the capacity to permit rapid and simple switching between cards of different issuers from a single mobile wallet. These wallets promote competition between cards at point-of-sale – competition which is not in the interests of issuers but is in the interest of consumers.”

Whether they are called a cartel or not, the ACCC is due to decide later this month whether CBA, NAB, Westpac and Bendigo banks should be allowed to collectively negotiate with Apple.

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