CBA’s Comyn warns on Apple’s ‘tremendous market power’

Commonwealth Bank chief executive Matt Comyn has sounded a warning over Apple’s growing dominance in digital wallets, accusing the technology giant of choking off competition in a key part of the payments market.

Appearing before a parliamentary inquiry on Tuesday, Mr Comyn said Apple controlled 80 per cent of the market for tap-and-go payments made through smartphones, and warned such market power should be a concern to lawmakers.

Commonwealth Bank chief executive Matt Comyn: “The thought that a single provider could have 80 per cent market share in an individual market is usually cause for concern.”Credit: Alex Ellinghausen

The chief of the country’s largest bank also said Apple paid “very minimal” corporate taxes in Australia, and said it made no contribution to the cost of sustaining payments infrastructure.

Digital wallets, which allow consumers to make tap-and-go purchases, have surged in popularity during COVID-19, and CBA believes they will become the most popular form of contactless payment by the end of this year.

Mr Comyn said the restrictions that Apple placed on the iPhone’s technology, in contrast to Google’s more open approach, were stifling competition because they stopped banks and fintechs from developing their own iPhone digital wallets.

“The thought that a single provider could have 80 per cent market share in an individual market is usually cause for concern. I’d be the first to say they make fantastic products, but this is a company that’s market cap is double Australia’s gross domestic product,” Mr Comyn said.

“They make great products, they’re an enormous company, they have tremendous market power, and they use it.”

Apple is both a partner and a competitor for banks. The lenders, several of which had an unsuccessful battle with the tech giant last decade, pay Apple an undisclosed fee in return for being able to provide its payment service Apple Pay. Mr Comyn said providing Apple Pay was now seen as “largely essential” for banks.

Specifically, Mr Comyn took aim at Apple’s policy of restricting third parties’ access to the near-field communication (NFC) chip on the iPhone, which allows tap-and-go payments through a handset. To access the chip, banks must send payments via Apple Pay. Google does not have such restrictions, and nor does it charge banks for its payment service.

Mr Comyn said Apple’s restrictions over access to the NFC chip meant the bank was unable to develop effective digital wallets to compete with Apple Pay.

The Australian Competition and Consumer Commission’s executive general manager for exemptions and digital, Tom Leuner, said access to the NFC could potentially be a major competition issue, though it had not done a “deep dive” on the topic.

Against CBA’s concerns, the regulator must also consider the pro-competition effect of technology giants disrupting the financial sector.

Apple was invited to appear before the committee, chaired by Liberal National Party MP Andrew Wallace. However, it declined on the basis it has provided a submission and answered questions on notice instead.

In its submission to the committee, Apple said its policies on access to the NFC chip were in part driven by security concerns. However, Mr Comyn questioned this claim by saying CBA’s data showed there was no difference in fraud rates between different types of digital wallets.

“Given their enormous resources and technical capability I find it difficult to believe that they couldn’t provide reasonable access in a secure way,” Mr Comyn said.

Another issue explored by the committee is Apple’s secrecy over the fees it charges banks. The company bans banks from disclosing the percentage fee that Apple takes on Apple Pay transactions, but Mr Comyn suggested the bank could provide further information on the fees if a request came from regulators.

CBA, Westpac and National Australia Bank tried to launch a collective boycott of Apple over access to the NFC chip in the iPhone in 2016, but the consumer watchdog rejected their request.

Since then, however, regulators in Europe have taken a harder stance on Apple’s practices, while Mr Comyn said there could also be lessons to be drawn from the media bargaining code introduced in response to the market power of global giants Facebook and Google.

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