ACCC sees shiny side of Apple Pay argument against banks

JOHN DURIE
November 30, 2016
The Australian

The ACCC has concluded Apple’s pay options are more likely to increase competition in banking than hurt it and has rejected an attempt by the big banks to jointly negotiate a deal with the behemoth.
Three of the big four banks and Adelaide have sought ACCC approval to negotiate jointly with Apple but as expected they failed to satisfy the public interest test to make the move.
Apple, which accused the banks of being a “hard-core cartel”, has made clear even if the banks won authorisation it would simply say no, which makes the banks’ attempts at protecting their own patch look even more desperate.
This was a draft decision so the banks have another chance, but of course even if they manage to convince the regulator Apple has already made clear it will show the banks the door if they come as a unit or even individually unless they play by its rules.
The final decision will be issued in March.
The aim of the game for the banks is to protect customers from escaping via an alternative payment system and the banks, with the exception of ANZ, are prepared to go to any lengths possible to avoid losing customer control.
This tells you something about their mindset and explains why there is uproar against the banks, because in this case alone they have demonstrated an extraordinary preparedness to put their own revenues ahead of their customers’ free choice.
They want to put their technology on Apple phones so when you the use a phone as a payment device you go directly to the bank technology and bypass Apple.
ANZ has agreed to play the game the Apple way and in doing so has picked up some 100,000 new customers via Apple.
By letting Apple have some of its interchange fee, ANZ has let its customers choose whatever payments system they want and it seems the move has been a stunning success for the bank.
The other banks note the rival handset manufacturers allow open access, which would benefit everyone.
They have a point, but the main aim is to extend their market power to the new payments technology and question then how competition is encouraged.
Apple has shown with other applications like music it eventually opens the door to competing users like Spotify, which competes with iTunes. It has done the same with fingerprint identification technology and with Google Maps, which compete with Apple Maps on Apple devices.
The point being Apple is competing in the handset market so it too has to be wary of the potential impact of losing customers if they get sick of its closed system.
This is a balancing act but Apple as the owner of the technology gets to set the terms and the banks can’t dictate terms to it.
The banks claim Apple gets a free kick on the payments system because its payments use the system to get to the declared bank.
This movement would come at a cost to the user, which means the banks are compensated.
Apple claims the banks’ move would hurt the security and simplicity of its pay platform.
It notes that 3500 issuers in 12 countries are happy to play by the Apple rules.