ANZ strikes deal to offer Apple Pay digital wallet service

ANZ has become the first bank in Australia to launch Apple Pay digital wallet service.

ANZ CEO Shayne Elliott in Sydney. Picture: Christopher Pearce

ANZ chief executive Shayne ­Elliott has talked of the “hard conversations” with Apple as his bank became the first in Australia to launch Apple Pay.

Mr Elliott described Apple as one of the world’s great companies and said reaching a deal to launch Apple Pay had not been easy.

“They keep you on your toes, and it’d be fair to say a lot of those conversations were robust,” Mr Elliott told The Australian in Sydney yesterday. “It’s great to partner with someone who holds you to really high standards. There was no easy conversations, it was hard.

“But you’re going at this with the intention, and you have a unified view of what you want to achieve, it’s great. From my position, I think we’re really fortunate and lucky to be able to deal with companies like Google and Apple because we learn a lot from those conversations.”

ANZ will be the first bank to ­deliver Apple Pay in Australia, ­allowing users to pay for things using their iPhone or Apple Watch. It was previously only available for American Express card holders but will now work for anyone with an ANZ Visa debit or credit card or an ANZ American Express credit card.

Apple had hit an impasse with Australia’s banks, with Commonwealth Bank chief executive Ian Narev declaring last year that Australia did not need the likes of Apple Pay because banks themselves produced their own mobile apps.

It is also understood that the banks had baulked at the transaction fee cut Apple was pushing for in Australia, where the interchange fee is capped at 50 basis points (half a per cent), unlike in the US.

Mr Elliot insisted he received a fair outcome from Apple.

“We’re happy and we know Apple is. We can look around at similar transactions happening globally, and it’s fair,” he said.

“It’s not really about economics of this thing, the interchange fee is not going to change the dial for us, or Apple. It’s about convenience, not clipping the ticket.”

The terms of the ANZ-Apple agreement have not been disclosed.

The stand-off with the banks led the federal member for Chifley, Ed Husic, to write to Reserve Bank governor Glenn Stevens, attacking the banks for “boycotting” Apple Pay. “Australian consumers should not be denied the ability to make payment choices that are openly available to consumers globally,” he wrote in the letter.

Mr Husic told The Australian that when he first saw the platform in action last year he figured it would be “an absolute no-brainer” for the Australian market.

“Yet for ages both Apple and the banks were cutting their noses off to spite their collective faces, getting locked into an arm wrestle over transaction fees — even though Britain managed the negotiation process way easier,” he said.

“So today’s decision is a step forward, and getting Android Pay off the blocks (as well) has the ­potential to really make smartphones the payment platform of choice in the near future.

“The challenge will be for the tech and banking players to make the fee structure more and more competitive. They can’t keep telling us how beneficial these systems are if consumers feel like they’re being fleeced for fees in the process.”

The Apple Pay system uses the iPhone or Apple Watch’s NFC chip, a secure element to store encrypted payment details, Apple’s TouchID fingerprint technology, and the Passbook application.

To use Apple Pay, users hover their device over an EFTPOS terminal, and the iPhone or Apple Watch screen then lights up, displaying which cards are available. Users then press their finger or thumb against the home button to activate TouchID, and the payment is made.

The global head of Apple Pay, Jennifer Bailey, said she was confident a prospective customer in Australia would be more likely to switch banks to ANZ, than switch from iPhone to another smartphone, in order to use mobile payments. In December, Google announced the launch of its rival Android Pay in the first half of 2016 in Australia, with several banks including Westpac and ANZ on board. Samsung Pay is also coming to Australia this year through an exclusive deal with American Express.