RBA To Regulate Apple & Google Pay
After banks have said they pay Apple too much for Apple Pay, over $110 million annually, government officials will regulate Apple Pay, Google Pay, and other digital payment services by increasing the Reserve Bank of Australia’s (RBA) powers with new legislation.
Through the new bill, the Treasurer will also be granted a new designation power, and the RBA will now have the ability to govern currently unregulated digital wallet providers like credit card networks and other types of transactions, which the government said the new governance would work to “protect consumers, promote competition and spur innovation”.
The new governance of Apple Pay, Google Pay, and others has been a long time coming, with Commonwealth Bank chief executive Matt Comyn speaking in a parliamentary hearing in July 2021 that Apple was taking full advantage of banks’ investments in payments infrastructure and its guidelines surrounding banks’ access to iPhones to make tap-and-go payments might be considered anticompetitive.
Comyn suggested that Apple is like a “gatekeeper,” comparable to other cases with giants like Standard Oil or Microsoft in the 90s, which eventually led the companies to have to answer to their activities in antitrust cases.
According to the Australian Banking Association, the data demonstrates roughly two-thirds of individuals aged 18-29 use mobile payments and that the share of card transactions made with smartphones spiked from 10% in early 2020 to 35% in the last quarter, April-June 2023.
Meanwhile, Apple had said of its bank relations that the company maintains that “the fees it charges Australian banks for using Apple Pay are not a money-making exercise”, according to the Financial Review.
Despite their denial of making money off banks, financial institutions pay Apple a few cents for every $100 of transactions, which amounted to over $110 million a year.
Banks do not pay any fees to Google for using Google Pay on Android phones.
The new legislation will alter the Payment Systems (Regulation) Act 1998 to modernise the classification of “payment” and “payment systems” to include the latest payment methods.
The new bill is meant to future-proof Australia’s payment laws and will include new ministerial designation power over specific payment services or platforms that exhibit threats of national significance to be subject to further surveillance by regulators.
“As payments increasingly become digital, our payments system needs to remain fit for purpose so that it delivers for consumers and small businesses,” Treasurer Jim Chalmers said.
“We want to make sure the shift to digital payments occurs in a way that promotes greater competition, innovation, and productivity across our entire economy.”