Apple has suggested that attempts by Australian banks to collectively negotiate on the terms of its Apple Pay platform could be viewed as a “Trojan Horse” manoeuvre used to normalise the public’s acceptance of new mobile payment fees.
The comments, which appeared in Apple’s latest submission to Australia’s competition watchdog over its ongoing collective negotiation stoush with some of Australia’s largest banks, follow the release of a draft ruling proposing to deny any such cartel authorisation.
“Apple has been puzzled by the applicant banks’ logically inconsistent argument that they wish to have the ability to charge consumers per transaction fees for using Apple Pay, but are unlikely to be able to do so owing to competition from other issuers like ANZ who do not,” Apple said in its submission.
“Perhaps the explanation might be that it is perceived by the applicant banks as a way of introducing and then proliferating a new revenue stream in the digital payments age.
“It may well be that the applicant banks have taken the view that customers may be more willing to pay fees to use Apple Pay because of the ease and security of using Apple Pay and, on that basis, see an opportunity to introduce and condition the market to transaction fees for the use of Apple Pay, with the longer term view to setting a precedent for charging for mobile payments on other digital wallets, in the future, including the banks’ own proprietary wallets,” the company said.
The Australian Competition and Consumer Commission (ACCC) released its draft ruling on the proposed cartel authorisation in late November last year, with ACCC chairman, Rod Sims, saying at the time that, “while the ACCC accepts that the opportunity for the banks to collectively negotiate and boycott would place them in a better bargaining position with Apple, the benefits are currently uncertain and may be limited”.
The move followed months of lobbying on the part of the Commonwealth Bank of Australia (CBA), Westpac, National Australia Bank (NAB), Bendigo and Adelaide Bank for permission from the ACCC to essentially form an authorised cartel to negotiate terms on the Apple Pay platform, which gives iPhone owners the ability to use their phones for contactless payments.
Unsurprisingly, Apple said in its submission that it welcomed the ACCC’s draft determination, proposing to deny authorisation for the banks to jointly negotiate with Apple over the terms of access to the Apple Pay platform.
While Apple said it agreed with the ACCC’s conclusion that the authorisation of a negotiating cartel for the banks could lead to consumer “harm”, it stressed that it does not agree that the benefits of such a plan, as claimed by the banks, could not be achieved without the authorisation to collectively negotiate with Apple.
Further, the company said smaller Australian financial institutions could miss out on opportunities to compete in the market.
“If the applicant banks are granted authorisation to continue to block or delay the expansion of Apple Pay to greater numbers of cardholders in Australia, this will have a significant impact on smaller card issuers who already, or could in the future, rely upon Apple Pay as a means of securing a digital presence in competition with the big banks,” Apple said in its submission.
Despite Apple’s claim, 31 of Australia’s smaller financial institutions, including People’s Choice Credit Union, Credit Union Australia, and Teachers Mutual Bank signed up to the Apple Pay platform in November last year via payment solutions provider, Cuscal.
“Our clients were clear, they wanted their customers to be able to use Apple Pay. So we made it happen. Today we have enabled 31 clients to offer Apple Pay and we expect even more in coming months,” Cuscal managing director, Craig Kennedy, said at the time.
"Our digital wallet (Pays) solution connects our clients’ cards to Apple Pay and it also connects our market-leading white-label mobile banking app directly to Apple Pay,” he said.