Apple Pay is coming to Australia one way or another. ANZ has embraced it, but other banks are fighting it, seeking access to Apple’s closed platform.
In this report, we outline what is at stake for Australia’s payment systems and consumers as four banks, including three of the top four with combined market capitalisation of A$300 billion ready themselves to take on Apple’s (market cap of nearly A$800 billion) entry into the market.
Both sides are holding themselves out to be the promotors of innovation and competition, but it doesn’t ring true particularly for consumers.
Apple Pay launched in Australia in November 2015 and is seeking to capture a slice of the banks’ interchange fee, worth an estimated $2.5b annually.
In the same way it exercised control over the music industry, we believe a similar theme will emerge since Apple appears willing to take on big business – in this case Australia’s largest banks - leveraging its disproportionate number of end customers.
Banks have reacted aggressively and in an unprecedented way to Apple’s approach into the financial services market by seeking relief from competition rules in fronting negotiations with Apple.
Apple in its response lashed out at the Australian banks, claiming that their attempt to pressure Apple to open up NFC technology on its iPhones threatens to compromise the security of devices and drastically reduce innovation.
The Australian population on balance appears not to be supportive of the banks forming a ‘cartel’.
The ACCC now faces an important decision as to whether to allow the Bank Applicants the ability to collectively bargain. Ultimately, for the ACCC to grant the banks their request to act collectively, the competition and consumer commission needs to decide whether this is going to be in the best interests of consumers.
ACCC is expected to make a final decision in October 2016.