Apple calls for fairness in payments reform, committed to competition

US tech giants Apple and Google have called for fairness and coherence in welcoming the Albanese government’s proposals to overhaul Australia’s payments systems.

US tech giants Apple and Google have called for fairness and coherence in welcoming the Albanese government’s proposals to overhaul Australia’s payments systems, reiterating their commitment to a competitive market.

Treasurer Jim Chalmers last week introduced proposals to expand the scope of the country’s payments regulation to give extra powers to the Reserve Bank to police all payments participants, including digital wallets developed by Apple and Alphabet’s Google.

“We are deeply committed to upholding the values of a fair and competitive market,” an Apple spokeswoman said.

“We welcome the opportunity to contribute to the Treasurer’s consultation papers, to ensure Australian consumers, merchants and developers have greater choice, without compromising on privacy and security.”

The proposals include giving more clout to ministers to regulate the tech giants, including powers that can be “exercised in the national interest”. They aim to modernise the “clunky” payments system, and align consumer data right laws with an updated payment regulatory framework.

Commonwealth Bank, the country’s largest lender, has long called for more scrutiny of the tech giants, as it considers Apple in particular acts as a “gatekeeper” of the infrastructure that powers customer payments through mobile phone wallets, which are becoming very popular.

According to research by the Australian Banking Association, the popularity of mobile wallet transactions has surged to more than $93bn in 2022, from just $746m in 2018. The number of cards registered to a mobile wallet has risen by 650 per cent to more than 15 million in 2022, from just over two million five years ago, the research shows.

Apple charges banks for the use of the Near Field Communication (NFC) chip on its phones through their apps, which in 2021 captured more than 80 per cent of all contactless transactions done through phones and smartwatches, CBA estimates.

Apple charges banks for the use of the Near Field Communication (NFC) chip on its phones through their apps. Picture: Bloomberg

The bank, which has the largest market share of Australian banking accounts, has long wanted Apple to free up the use of the NFC chip, but Apple refuses, citing security concerns.

Besides the RBA, the Australian Competition & Consumer Commission is also known to be keeping a close watch on Apple’s market power, but has not forced it to open up its technology.

Apple’s position has been that it is entitled to charge for the technology it has developed, which it argues promotes competition because several providers can use it. It has also argued it is uniquely positioned to offer tight security and privacy.

“Apple Wallet provides a platform for third parties to give their customers easy access to their products and services through passes,” Apple’s spokeswoman said.

“(It) provides users with an easy, secure, and private digital wallet so they can conveniently and securely access and use their payment cards, loyalty cards, tickets, boarding passes, health insurance cards and more.”

Google Australia director of public policy Lucinda Longcroft said the company supported the government’s plan to take “an enhanced leadership role in the payments system”.

She said Google looked forward to “working with (the government) as they continue to develop their regulatory approach”. “Payments is a complex and dynamic sector where co-ordination and coherence are essential in ensuring that consumers and businesses get the full benefit of competition and innovation within the ecosystem,” she said.

“Google welcomes the government’s release of the strategic plan for the payments system in collaboration with industry, regulators and consumers.”

Consultation on the government’s plan will take place until July 5, with new legislation expected to be introduced by the end of the year. The plan aims to boost competition, productivity and innovation, strengthen payments infrastructure, modernise regulatory frameworks and lift cyber security investment to combat scams and fraud.

As part of the reforms, the government plans to phase out cheques by 2023, as well as the Bulk Electronic Clearing System (BECCS) in favour of the New Payments Platform (NPP).

Christian Westerlind Wigstrom, chief executive of payments company Monoova, said the government’s ambition to align a broad array of innovation into one coherent strategy was “commendable”.

“The review validates a thousand decisions we have made over the last five years,” she said. “This includes our view that NPP will be the new norm for all payments, not a sideshow.”