Apple Pay wins legal battle against Australian banks

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Apple Pay could lose leverage in US from Australian bank fall out
Apple Pay wins legal battle against Australian banks

Apple has claimed first blood in its battle with Australia’s largest banks, which have been trying to force it to offer them access to Apple Pay.

Apple Pay could lose leverage in US from Australian bank fall out
Apple Pay wins legal battle against Australian banks

The decision could help smooth Apple Pay’s difficult entry into Australia, where mobile-payment technology is more advanced than in the US and where most consumers simply wave a debit or credit card near a reader to make everyday payments – according to a report in the WSJ.

In a draft ruling on Tuesday, Australia’s antitrust watchdog said it wouldn’t allow Commonwealth Bank of Australia , Westpac Banking, National Australia Bank and regional lender Bendigo & Adelaide Bank to collectively boycott Apple’s mobile-payments platform.

The lenders, which together account for about two-thirds of household deposits and issued credit in the country, had sought permission to negotiate collectively with Apple to avoid antitrust action. The regulator, the Australian Competition and Consumer Commission, will make a final decision in March.

Apple has defended its hold over access to its technology and characterized the banks’ action as an attempt to blunt Apple Pay’s entry into the Australian market. It said in a statement it welcomed the draft decision and would work with individual banks to bring Apple Pay to their customers.

Only one of the country’s big four banks, Australia & New Zealand Banking Group has signed a deal with Apple to use Apple Pay, which launched Down Under in late 2015 with American Express.

Apple doesn’t allow any entity direct access to its NFC controller for reasons of privacy and security. Banks can make use of it through Apple’s digital wallet – for a fee.

The banks argued that they should be able to offer competing wallets on Apple’s iOS platform, increasing competition and innovation in digital wallets and apps, and that by being able to negotiate collectively increased their chance of doing so.

 Rod Sims, chairman of the competition regulator, said Australian banks can already offer digital wallets on iPhones through their own banking apps, without direct access to Apple’s NFC system.

Some banks, including National Australia Bank, already offer mobile-banking applications on Apple devices that allow users to check their balances, control their credit cards and make online payments. Australian banks can also offer their wallets on rival phones that use the Android operating system.

“Apple Wallet and other nonbank digital wallets could represent a disruptive technology that may increase competition between the banks by making it easier for consumers to switch between card providers and limiting any ‘lock in’ effect bank digital wallets may cause,” he said.

In its submission to the regulator, Apple said authorization for a cartel among the banks would perpetuate “oligopolistic” banking conditions in Australia, and that Apple Pay was an example of competition that the banks wrongly perceived as a threat. It said it couldn’t agree to the terms the banks were seeking, including allowing them to charge customers for using Apple Pay.

The banks, in a joint statement, said that if the regulator’s ruling stands it would mean iPhone users have no choice on the digital wallet they use for payments, and the industry would be denied the chance to compete with Apple. They said their application wasn’t about preventing Apple Pay from coming to Australia or reducing competition, but about providing consumer choice.