The banks included in the determination include Bank of Australia, Westpac Banking Corporation, National Australia Bank, and Bendigo and Adelaide Bank.
“The ACCC is not satisfied, on balance, that the likely benefits from the proposed conduct outweigh the likely detriments. We are concerned that the proposed conduct is likely to reduce or distort competition in a number of markets,” ACCC Chairman Rod Sims said.
The banks had requested the ACCC to provide them with the authority to collectively bargain with Apple for access to the NFC chip used inside the iPhone 6 and higher for Apple Pay. This would have allowed banks to use the NFC chip for their own mobile payment system that would have competed with Apple Pay. The banks argued that this move will benefit consumers as it would lead to an increase in competition among the banks, provide more options to consumers, and lead to more innovation and investment in the digital wallet and mobile applications sector in the country.
The banks argued that this move will benefit consumers as it would lead to an increase in competition among the banks, provide more options to consumers, and lead to more innovation and investment in the digital wallet and mobile applications sector in the country.
While the ACCC agreed that granting banks access to the NFC chip inside the iPhone will lead to increased competition and “significant public benefit” in the mobile payment services sector, it would also lead to “distortions to and reductions in competition.” The three primary reasons behind this include gaining access to the iPhone’s NFC chip affecting Apple’s strong hardware-software integration strategy which would impact how the company competes with Google.
Second, since mobile payment technology is new and constantly changing, it is unclear how the digital mobile payment space will develop in the future.
“Access to the NFC in iPhones for the banks could artificially direct the development of emerging markets to the use of the NFC controller in smartphones. This is likely to hamper the innovations that are currently occurring around different devices and technologies for mobile payments,” Mr Sims said.
Lastly, the likes of Apple Watch allow users to easily switch cards before making a payment, which would ultimately help increase competition among banks thereby “limiting any ‘lock in’ effect bank digital wallets may cause.”
Despite their best effort, it is clear that the ACCC is not going to budge and allow major Australian banks into bullying Apple to give access to the NFC chip inside the iPhone.