Commonwealth Bank takes aim at Apple over competition

Commonwealth Bank CEO Matt Comyn has accused Apple of hindering competition in Australia’s digital payments system.

Commonwealth Bank CEO Matt Comyn has accused tech giant Apple of hindering competition in Australia’s digital payment ecosystem. Picture: Joel Carrett

Commonwealth Bank CEO Matt Comyn has accused Apple of hindering competition in Australia’s digital payment ecosystem, as he warned of the “inevitable distortions” in the market from the technology giant restricting access to its payments app.

Speaking at a parliamentary joint committee on corporations and financial services, Mr Comyn accused the technology giant of dressing up its self-preferencing as security concerns when restricting competitor access to its payment functions, but stopped short of labelling its behaviour monopolistic.

“The thought that a single provider can have 80 per cent market share in an individual market is usually cause for concern,” Mr Comyn said.

“And this is a company, and I’d be the first to say they make fantastic products, but this company, its market cap is double Australia’s GDP. And certainly in the context of tax receipts, makes very little contribution to Australian government receipts.”

Apple’s market share in tap-and-pay at point of sale in digital wallets in Australia currently stands at 80 per cent, he told the committee.

“All they (Apple) do is direct everything through the Apple pay wallet. It means that there can be no competing wallets on the iOS operating system. It hinders the ability of new entrants to be able to come into market to develop competing wallets.”

Mr Comyn agreed with the suggestion that Australia’s entire digital payment system could be held hostage to Apple.

“From a competition perspective, when something becomes an essential, Apple Pay has probably become largely essential for financial institutions, and it’s highly unlikely that anyone can compete with Apple’s position with an 80 per cent share at the moment,” he said.

Apple currently restricts access to its NFC chip in iPhones, in contrast with Google, which he said had a “much more open architecture”.

“The issue of digital wallets is an excellent example of how technology is challenging the traditional way we think of financial systems,” he told the committee.

“Strong competition will be crucial to ensure the benefits that result in better customer outcomes.”

Apple’s market share in tap-and-pay at point of sale in digital wallets in Australia currently stands at 80 per cent, CBA says. Picture: AFP)

Commonwealth Bank estimates that by the end of this year, the majority of instore payments in Australia will be made by a digital wallet.

“The ability for mobile phone providers to restrict competing services access through the app store will inevitably lead to distortions in markets for service provided through mobile apps,” Mr Comyn said.

Additional legislative powers may need to be conferred with a view to reintroducing competitive tension, he added.

“It may be necessary to increase the powers of the RBA to expand beyond their remit. I suspect, and would support, the Treasury having a broad role in setting the overall landscape and regulatory architecture on behalf of the country. And I also think that the ACCC has an important role to play in this area as well.”

“There’s definitely examples where we’ve seen self-preferencing. We’ve seen that play out in places like the app store. You see it in terms of the payment services for app providers, we see it with access to the NFC chip. It’s usually dressed up around security concerns but generally you could confidently say there has been evidence of self preferencing over a reasonable period of time.”

Appearing in front of the same committee, ACCC executive general manager Marcus Bezzi also spoke on self-preferencing actions by the major tech companies.

“In the digital economy area, once of the concerns thats been expressed internationally is self preferencing by the big digital companies.

“If they are operating in a market sand giving themselves an advantage or discriminating against the people that are competing against, that can have a very serious effect on competition,” he said.

Mr Comyn also refuted earlier claims by Zip co-founder Peter Gray that banks were forcing borrowers to close their buy now, pay later accounts to gain home loan approval.

“I don’t think there’d be any targeting of a buy now, pay later provider. I think it’s simply a function of, as a financial institution, you have to factor in all of the outstanding debts and expenditure in the serviceability of a loan.”

On Monday, in the first of three days of hearings on the mobile payments system, regulators warned they could scrutinise the burgeoning ecosystem following significant growth through the Covid-19 pandemic.

Appearing in front of the parliamentary committee, members of the Reserve Bank said “there could be a case before long” for a review of mobile payments.

But RBA head of payments policy Anthony Richards said the bank would be constrained by current regulatory powers that do not extend to cover mobile payments.

“If we thought there were major issues here, we would for the time being, have to go to the ACCC,” he said.

“But we’re indicating that it’s very much a live issue and it could be a case before too long.”

In its submission ahead of Mr Comyn’s appearance, CBA said fair, reasonable and open access to mobile device ecosystems would be critical for digital payment innovation.

“Given the importance of the mobile phone ecosystem to commerce and payments in Australia, it is vital to ensure that such ecosystems operate on a basis of competitive neutrality that allows for, and facilitates, fair and open competition across the entire ecosystem.

“Regulation should prevent the development of monopolies or market dominance by a small number of players and ensure interoperability across mobile wallet ecosystems so that consumers can benefit from greater choice and innovation.”