Apple has won a battle in its drive to control the future of mobile payments technology following a decision by regulators to deny Australian banks the right to collectively bargain and boycott its Apple Pay system.
The Australian Competition and Consumer Commission ruled on Friday the proposed conduct by a consortium of major banks could reduce or distort competition in a number of markets, including the provision of “digital wallets”. A “digital wallet” is an application on a mobile device that enables payments in shops and can store other information, including loyalty and membership cards.
“While the ACCC accepts that the opportunity for the banks to collectuively negotiate and boycott would place them in a better bargaining position with Apple, the benefits would be outweighed by detriments,” said Rod Sims, ACCC chairman.
The banks – Commonwealth Bank of Australia, Westpac Bank, National Australia Bank and Bendigo and Adelaide Bank – had sought authorisation to access the Near-Field Communication controller in iPhones, as well as reasonable access terms to the App Store. This would have enabled the banks to offer their own integrated digital wallets to iPhone customers in competition with Apple’s digital wallet, without using Apple Pay.
The test case is likely to help Apple Pay to get established in Australia, which is one of the world’s most advanced electronic payments markets. It also sets an important regulatory precedent as Apple looks to role out its Apple Pay system worldwide.
The ACCC said providing access to the iPhone NFC controller would likely have lead to increased competition in mobile payments services and this would be a significant public benefit.
But the likely distortions to and reductions in competition caused by the conduct would also be significant.
The ACCC said enabling access to the controller could affect Apple’s current integrated hardware-software strategy for mobile payments and operating systems more generally, thereby impacting how Apple competes with Google, which developed the rival Android platform.
The regulator said digital wallet and mobile payments technology is in its infancy and enabling access to the iPhone controller could hamper new innovations, including payments made by smart watches or other devices.
The ACCC said Apple Wallet and other digital wallets could increase competition between the banks, which would make it easier for customers to switch providers.