Reports in The Sydney Morning Herald indicate that Australia’s banks are less than wholly enthused to jump on board the Apple Pay bandwagon – despite the fact that issuers in the U.S., United Kingdom and Canada have elected to do precisely that. Major banks and financial institutions in other countries are fighting the rollout.
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In the United States, Apple is believed to earn about 15¢ on every $100 of transactions. In Australia, banks only make about 50c per $100, so giving up 30 per cent of their profit to Apple is a sticking point.
The reason for this likely relates to the amount of money the banks pull in for these fees, compared to banks in the United States. Just two months ago, Apple (for the first time in its history) pursued the Japanese bond market as it issued 250 trillion yen in five-year global yen bonds.
To work, however, the platform needs a deal with the bank that issued the credit card – and that’s where Australia’s big four banks are holding up progress, according to Fairfax Media. The six banks in talks with Apple are believe to be the Royal Bank of Canada, TD Canada Trust, Scotiabank, Bank of Montreal, CIBC, and National Bank of Canada.
CBA boss Ian Narev says the functionality associated with Apple Pay has been available in Australia up to two years and the nation’s banking sector is “ahead of a lot of the other markets around the world where Apple has done well”.
There is also a concern that signing on with Apple Pay gives away too much control of the relationship with the customer; by putting their cards behind Apple, banks worry that they are losing opportunities to expand sales and conversion opportunities.
It appears that the expansion of Apple Pay into Australia could be farther off than some had hoped.
Despite the reluctance to cut a deal with Apple, Mr Narev said CBA was closely watching the movement of big tech players into financial services, as the global banking landscape is reshaped by ubiquitous mobile phones. “If it is not Apple, it might be Google; if it is not Google, it might be Samsung; if it is not Samsung, it might be Amazon; if it is not Amazon, it is going to be someone else”, he added. It is only going one way. It is also facing competition from Samsung, which announced last week it would launch Samsung Pay in the US on September 28.
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“But we have got customers, we have got distribution, we have got brand, we have got product”.
