Banks unite, seek OK to work together on mobile payments

Some of Australia’s biggest banks have sought ACCC approval to work together on contactless “mobile wallets”.

Using an Apple Watch to demonstrate tap and go contactless payment technology.

Some of Australia’s biggest banks are looking to work together on contactless payments, requesting approval from the competition watchdog to conduct joint negotiations with third-party providers of mobile wallets in a bid to limit the influence of tech giant Apple.

The application, made to the ACCC yesterday, comes from Westpac, NAB, Commonwealth Bank and Bendigo and Adelaide Bank.

The four parties to the proposal said they hoped joint negotiations would deliver better outcomes for customers through greater choice and common security standards.

While Apple is not explicitly mentioned in the group’s statement to the market, the application makes clear the plan is largely a response to the tech giant’s extensive market power.

The official application notes the sway of Samsung, Google and Apple in the mobile payments space, but tags the latter as the biggest risk to competition.

“Certain third party wallet providers will have considerable bargaining power in relation to card issuers given their influence in the mobile communications landscape,” the application reads.

“However, Apple has particularly significant bargaining power in negotiations relating to Apple Pay due to its control of both a key operating system and key mobile hardware.

“This bargaining power and Apple’s negotiating strategies appear to have resulted in Apple Pay being introduced in other countries in circumstances that limit customer choice, security and transparency and that the applicants wish to avoid.”

Apple does not currently allow mobile payment apps beyond its own Apple Pay onto its smartphones.

The application notably excludes ANZ, after the big four bank member agreed a deal with Apple Pay in April.

ANZ admitted it had struggled to flesh out a suitable agreement with the tech behemoth.

“They keep you on your toes, and it’d be fair to say a lot of those conversations were robust,” chief executive Shayne Elliott told The Australian at the time.

“There was no easy conversations.”

If the application clears the ACCC the four institutions will be able to work together on negotiations if they believe the talks could deliver benefits to their customers.

“If successful, the application would have tremendous benefits for the entire Australian mobile payments landscape including for public transport fares, airlines, ticketing, store loyalty and rewards programs and many more applications yet to be developed,” Novantas senior advisor Lance Blockley said on behalf of the applicants.

Mr Blockley confirmed ANZ had initially been a party to the mass application.

“One of the applicants was ANZ Bank,” Mr Blockley, a senior advisor with financial advisory firm Novantas, said on Wednesday.

“They chose to pull a fast one on their competitors and their joint applicants earlier this year when they withdrew from the group of applicants and decided to negotiate separately with Apple.”

The banks are not seeking permission to work together on fees and charges, with each bank to engage separately with mobile wallet providers on contractual details.

- with AAP