Apple Responds To Australian Banks’ Apple Pay Demands

Apple has now issued a formal response to the Australian Competition and Consumer Commission (ACCC), after the Australian banks demanded access to the NFC chip on the iPhone. The company says that giving such access could be potentially harmful to consumers.

Initially, Apple dismissed the idea on security grounds, also saying that banks were acting like an illegal cartel. Now, the company has made a 21-page formal submission to the ACCC, giving two additional reasons why such a move would harm consumers.

Apple’s first argument is what is already identified by the ACCC, saying that the four largest banks already have nearly the entire market to themselves, with no competition whatsoever. In this case, Apple quoted the words of the commission’s chairman.

It’s fair to say that, even though you’ve got four main players, they do have about 85 to 90 per cent of the market share and the competition between them is not as intense as you’d expect.

Secondly, forcing the company to negotiate with four banks as a whole slows down the process quite a bit, Apple says. Each bank can hold out knowing that another one won’t go through without coming together. Aside from Apple Pay, it would slow down progress for any sort of innovation in the mobile wallet space.

The only effect that the proposed collective bargaining/boycott could have is to further delay, or even block, the expansion of Apple Pay in Australia. This will put a brake on new competition, with respect to digital presentment methods and retail banking services more broadly, by stifling the incentive for existing players to develop innovative new solutions that build upon and compete against the security, privacy and convenience of Apple Pay.

The entire piece can be found here.