CBA, Westpac, NAB, Bendigo unite on mobile payments

Some of Australia’s top banks are looking to work together on contactless payments in a bid to limit Apple’s clout.

The banks want to conduct joint negotiations with third-party providers of mobile wallets.

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 & Adelaide Bank.

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

They believe consumers will benefit if they can choose the best mobile wallet that suits their own needs using their own devices. That way, all consumers could have access to new features, apps and technologies developed by the makers of different mobile wallets.

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 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 on its smartphones. The application notably excludes ANZ Bank, which struck a deal with Apple Pay in April.

ANZ admitted it had struggled to flesh out a suitable agreement with Apple.

“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 were no easy conversations.”

If the application clears the Australian Competition & Consumer Commission the four banks 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,” said Lance Blockley, senior adviser of Novantas, an analytic advisory services firm, on behalf of the applicants.

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.