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Big Banks Denied By ACCC In Collective Bargaining Over Apple Pay

The big banks efforts to collectively bargain with Apple over the use of the iPhone’s NFC chip have hit a major hurdle today, with the ACCC denying the banks request to collectively bargain in draft determination issued today.

“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 insist their petition for collective bargaining is one driven by a desire to open up the iPhones NFC chip technology and develop appropriate industry standards for digital wallets affecting their ability to pass on any fees charged by a third party digital wallet provider.

The banks argue that being able to engage in the proposed conduct could lead to a number of public benefits such as increased consumer confidence and choice.

“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 ACCC says that by allowing the three of the big four banks to boycott Apple Pay, it would prove detrimental to consumer choice for digital wallets.

Sims asserts that “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.”

“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,” he said.

He indicated that the decision to deny the bank’s petition was also driven by the possibility that enabling them could reduce or distort competition between the banks and across tangential markets.

“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 regulator said.

The ACCC is seeking submissions on its draft determination before making its final decision. However, at this stage, it seems unlikely that the regulator will turn around on its decision.

With more and more banks supporting Apple Pay, it’s likely only a matter of time before CommBank, NAB and Westpac come to Apple’s negotiating table.

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