Willing to compromise

The banks say Samsung and Google already provide access to NFC functionality without detriment to security. They also say that when Apple Pay was launched in China and Japan, Apple was willing to make compromises with banks over issues, including security.

For example, in China, the banks point to reports of Apple's negotiations with UnionPay which may have resulted in using an NFC-enabled SIM card, of the kind used by China Mobile and China Unicom, rather than the iPhone's embedded systems. In Japan, the banks cite reports of iPhone hardware being upgraded to be compatible with the local variant of NFC and to allow some small payments without requiring a touch ID fingerprint or a PIN.

"This is an example of Apple making changes not only to its hardware, but also in relation to its 'non-negotiable' security requirements," the banks said.

The latest submission also highlights the concerns of CBA, NAB and Westpac at their rival ANZ breaking ranks to join Apple Pay, noting bank customers "are far more likely to change cards in order to use Apple Pay than they are to give up their iPhones in order to use mobile payments, as demonstrated by the increase in card applications reported by ANZ Bank since it launched Apple Pay".

ANZ chief Shayne Elliott at ANZ's Apple Pay launch in April. Jessica Hromas

The banks say they are "under intense pressure to participate in Apple Pay, and risk losing customers to other issuers who offer Apple Pay before them ... The idea of a collective negotiation is necessarily predicated on the banks' desire to offer Apple Pay. They only wish to offer other alternatives alongside Apple Pay".

Due to the prevalence of tap-and-go terminals in Australia, which contrasts to the US, "the uptake of integrated mobile wallets in Australia could be very fast", the banks said.


Extra costs

The banks say Apple's conduct will create extra costs to the Australian economy. One of the experts retained by the banks, Susan Athey from the Graduate School of Business at Stanford University, said in a report attached to the submission that without collective bargaining, ultimately Apple will prevail "in its goals of adding an additional 'Apple Pay transaction' tax on what may eventually become a large share of all transactions in Australia, as well as in preventing consumers from seeing transparent and accurate signals about the additional tax imposed on this payment mechanism".

The banks say they are not alone in standing up to Apple. Similar actions being contemplated in South Korea, where fintech companies are intending to bring an action against Apple in the Korean Fair Trade Commission. In Switzerland, the consumer protection authority has already filed a complaint with the Swiss competition commission in relation to the same issue.

Companies and organisations that have made submissions to the ACCC supporting the banks' application include Coles, the Australian Retailers Association, the Australian Payments Clearing Association, payments fintechs Bluechain and Indue, Heritage Bank, Tyro Payments, eftpos and MasterCard.