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Published: Tue, February 14, 2017
Business | By Megan Pierce

Australian banks narrow focus of Apple Pay collective bargaining request

Australian banks narrow focus of Apple Pay collective bargaining request

The banks have applied to the ACCC for permission to jointly negotiate access to Apple Pay and NFC function on iPhones, saying that it's now not about Apple's fees but rather, its access to its NFC technology.

Throughout the process, the banks have claimed they want access to the NFC controller in iPhones, as Apple now does not allow any other entity direct access.

In their latest submission, the banks have sought to address the ACCC's concerns by removing collective negotiation on the potential to pass-through the additional fees Apple wishes to impose on the payment system, and limiting the authorisation term to 18 months - half the original term sought.

In a statment, Australian banks explain that opening up the NFC chip is more valuable than the high fee charges.

"Open access to the NFC function, as occurs on the world's most popular and widely installed mobile operating system Android, is important not just to the applicants and mobile payments, but to a range of NFC-powered functions across many sectors and uses", a spokesperson for applicants, Lance Blockley, said in a statement.

According to them, their focus is now only on negotiating with Apple in order to open up access to the NFC chip.

"This application has always been about consumer choice, and allowing competition between the makers of mobile wallets to offer the best products and features they can to determine which mobile wallet consumers will use".

By dropping their bid to negotiate together on fees and focusing exclusively on technological access, the banks are seeking to put the regulator's focus onto Apple's restrictions and tip the decision their way. All customers benefit from real competition. In today's applications, the banks referred to Apple's comments as a "conspiracy theory" and dismissed it as "fantasy".

Apple has said that even if the ACCC grants the banks' application it will not offer open slather access to the iPhone's NFC capabilities.

"Apple is completely wrong in its assertion that the proposed conduct is about fees and not about access". Whether that was legal or not is irrelevant now, because the banks followed the advice of the commission which could be enough to give them the win they seek against Apple.

More importantly, Ms Bailey accused the banks holding out on joining Apple Pay - Commonwealth Bank of Australia, National Australia Bank, Westpac Banking Corp and Bendigo and Adelaide Bank, who control two-thirds of Australian cardholders - of paying lip service to acting in the best interests of their customers. Apple has restricted access to its own apps and says giving others access would undermine the security and usability of the system. NFC is commonly used as a means of contactless payment for smartphones. The applicants expect that Apple Pay would be offered to their customers alongside open access to the NFC function.

iPhone users can use Apple Pay to register credit cards, and making payments by swiping the devices over contactless payment terminals. "Nor are the applicants manufacturers of mobile phones - both parties need each other to bring strong mobile payment offerings to the market", Blockley added. Now they don't want to discuss the cost factor and are only concerned about getting access to NFC.

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