ACCC blocks the banks from boycotting Apple over Apple Pay

THE ACCC has denied the banks the right to collectively bargain and boycott in their negotiations with Apple over the new Near-Field Communication (NFC) Apple Pay system.

The Commonwealth Bank, Westpac, NAB, Bendigo, and Adelaide Bank had been seeking legal protection to negotiate in ways which would ordinarily cause the ACCC concern under the Competition and Consumer Act 2010.

The banks were looking for access to the NFC controller on Apple's phones, allowing them to bypass the Apple Pay and offer their own digital wallets with NFC capabilities. 

They also sought to remove restrictions Apple imposes preventing them from passing on fees that Apple charges the banks for using Apple Pay. 

The banks are arguing being able to collectively bargain with and possibly boycott Apple will benefit consumers through increasing the likelihood of competing wallets on the iOS platform, which would mean: 

  • increased competition and consumer choice in digital wallets in Australia,
  • increased innovation and investment in digital wallets and other mobile applications using NFC technology,
  • greater consumer confidence leading to increased adoption of mobile payment technology in Australia, and
  • increased pricing efficiency in digital wallets.

"This is currently a finely balanced decision. The ACCC is not currently satisfied that the likely benefits from the proposed conduct outweigh the likely detriments," ACCC Chairman Rod Sims said.

"While the ACCC accepts that the opportunity for the banks to collectively negotiate and boycott would place them in a better bargaining position with Apple, the benefits are currently uncertain and may be limited.

The applicant banks have yet to reach an agreement with Apple over deals to enable their cardholders to use Apple Pay.

Apple does not currently allow the banks, or any entity, direct access to the NFC to allow them to offer their own integrated digital wallet to iPhone users.

"However, banks can already offer competing digital wallets on iPhones without direct access to NFC, through their own apps using Apple Pay payment technology, or using NFC tags. Banks can also offer digital wallets on the Android platform," Mr Sims said. 

The ACCC said it is also concerned the proposed conduct could reduce or distort competition between the banks when negotiating with Apple, which could reduce the level of innovation and public benefit.