Apple notes that the banks account for a 66% market share in credit cards, adding: “Given their scale and market share, the applicants are essential to Apple’s ability to offer Apple Pay on a meaningful basis within Australia”.
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In a pithy, three-page submission to the ACCC, Apple says proving access to the phone’s transmitter to allow bank applications to facilitate contactless payments would compromise the security of Apple’s hardware.
Apple further claims that opening up its proprietary hardware and software to banks would constitute a security risk: “Providing simple access to the NFC antenna by banking applications would fundamentally diminish the high level of security Apple aims to have on our devices”. “Most have little direct insight into Apple Pay or Apple’s terms”, wrote Demmer, who called out one bank for refusing to sign a non-disclosure agreement that would have given them privileged access to Apple Pay’s technical details.
Apple says doing so would compromise the security of its platform as it mandates very high standards when customers make payments on Apple systems.
‘Unfortunately, and based on their limited understanding of the offering, the [banks] perceive Apple Pay as a competitive threat.
The ACCC has now posted Apple’s submission in reply, a letter (PDF) in which it argues that giving access to iPhones NFC would harm consumers by jeopardising security.
ANZ is not a party to the ACCC application after breaking ranks with the other major banks in April in a deal that allows its cards to be loaded on to Apple Pay.
In July, a Reuters follow-up report surfaced titled “Australia’s big banks team up to challenge Apple on mobile payment apps”, wherein they noted that Australia’s three biggest banks, including no. 1 lender National Australia Bank, said they had lodged a joint application with anti-trust regulators seeking approval to collectively negotiate with Apple to install their own electronic payments applications on iPhones.
Apple asked the ACCC not to provide any authorization for a deal this month and suggested it take the full six-month statutory period to assess the application more thoroughly.
While Apple is a dominant player in Australia’s smartphone market, Apple argues in its response that Apple Pay is a new entrant to a payments market otherwise dominated by Australian banks. Australia’s banks were also understood to be reluctant to let Apple infiltrate a market which earns them around AU$2 billion ($1.4 billion) annually in interchange fees.
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To say that Apple is having trouble getting Apple Pay off the ground successfully in Australia would be an understatement.
