Australian Banks tell Apple: It’s not about your Apple Pay Fees, it’s about access to NFC

The following is a press release, verbatim from Bendigo and Adelaide Bank, Commonwealth Bank of Australia, National Australia Bank, and Westpac. The group of Australian banks applying to the Australian Competition and Consumer Commission (ACCC) for permission to jointly negotiate over access to Apple Pay and the Near Field Communication (NFC)* function on iPhones, have today announced they have narrowed the application to solely focus on open access to the NFC function.

Open access to the NFC function on iPhone is required to enable real choice and real competition for consumers, and to facilitate innovation and investment in the digital wallets available to Australians. Without open NFC access on iPhone, no genuine competition in the provision of mobile wallets is possible and Apple will have a stranglehold on this strategically important future market.

The four banks making the application – Bendigo and Adelaide Bank, Commonwealth Bank of Australia, National Australia Bank, and Westpac – have responded to concerns raised in the ACCC’s finely balanced draft determination, and proposed to remove from consideration items the ACCC considered may lead to a public detriment.

In the applicants’ response to the ACCC, the applicants have addressed these concerns by removing collective negotiation on the potential to pass-through the additional fees Apple wishes to impose on the payment system (i.e., the requested collective negotiation will be in relation to NFC access alone), and limiting the authorisation term to 18 months – half the original term sought.

Open NFC access would enable the delivery of substantial public benefits to Australian consumers, not just in payments, but across retailing, loyalty programs, building or member lounge security, and other NFC-use cases. As a result, the applicants have again been supported by nearly all of Australia’s leading retailers, as well as competitors in the provision of payments services to merchants.

The applicants flatly reject Apple’s unsupported assertions that the application is about an objection to the fees that Apple wishes to impose, rather than NFC access. Apple’s conspiracy theories about “Trojan horse fees” are similarly dismissed by the applicants as fantasy.

Apple recorded over $US7 billion in services revenue, which includes Apple Pay fees, from their customers in the last 3 months of 2016 alone, and hopes to double that over the next four years. With their services business set to become the size of a standalone Fortune 100 company this year, Apple is the leading expert on deriving fee revenues from iPhone users, not the applicants.

“The applicants are ready, willing, and able to participate in Apple Pay, alongside being able to offer their customers their own mobile wallet products,” payments specialist and spokesperson on behalf of the applicants, Lance Blockley, said.

“This application has always been about consumer choice, and allowing competition between the makers of mobile wallets to offer the best products and features they can to determine which mobile wallet consumers will use. The applicants want to put up their digital offerings head to head with Apple Pay, and let the market and individual consumers decide which best suits their needs.

“Open access to the NFC function, as occurs on the world’s most popular and widely installed mobile operating system Android, is important not just to the applicants and mobile payments, but to a range of NFC-powered functions across many sectors and uses. This has global implications for the use of NFC on smart phones.

“The application seeks permission to jointly negotiate with Apple; this is not an attempt to delay Apple Pay from entering the Australian market. The applicants expect that Apple Pay would be offered to their customers alongside open access to the NFC function. Any delay or frustration will be as a result of Apple refusing to negotiate.

“Apple is not a bank or a credit card scheme, and Apple cannot on their own complete a mobile payment. Nor are the applicants manufacturers of mobile phones – both parties need each other to bring strong mobile payment offerings to the market.”

The applicants look forward to the ACCC’s final decision, and believe their submission further demonstrates the net public benefits of the application, and substantially removes any risk of public detriment.

Source: Bendigo and Adelaide Bank, Commonwealth Bank of Australia, National Australia Bank, and Westpac

MacDailyNews Take: As we wrote last November:

Dear Aussie banks: No, you cannot have access to iPhone’s NFC chip. Protecting iOS users’ security is of paramount importance.

No other banks the world over require direct access to iPhone’s NFC chip in order to support Apple Pay.

Apple Pay boss says Aussie customers willing to dump banks who fail to support Apple Pay – February 10, 2017
Apple steps up battle with Australian banks over Apple Pay boycott motive – February 6, 2017
ACCC proposes to deny authorisation for banks to collectively bargain with and boycott Apple on Apple Pay – November 29, 2016
Australian banks dismiss Android NFC past in Apple Pay negotiations – November 14, 2016
Australian banks accuse Apple of anti-competitive behavior, want access to iPhone’s NFC chip to take on Apple Pay – July 28, 2016
ANZ welcomes Apple Pay in Australia with a funny new TV ad – May 5, 2016
Apple expands Apple Pay in Australia with ANZ bank deal – April 28, 2016
Aussie consumers lose as banks effectively boycott Apple Pay – November 27, 2015
Australian banks accuse Apple of anti-competitive behavior, want access to iPhone’s NFC chip to take on Apple Pay – July 28, 2016
ANZ welcomes Apple Pay in Australia with a funny new TV ad – May 5, 2016
Apple expands Apple Pay in Australia with ANZ bank deal – April 28, 2016


      1. Oh, we do have credit cards. Also, believe it or not, we have electrical power (220 volts!), we have internet, we even have PayPal. We only miss Apple Pay.

        Apple has lost interest in “smaller” markets like Germany (only 80 million people, and only 10% market share for iPhone). Arrogance strikes back.

        It is the same problem why Apple has lost interest in real-pro hardware and in formerly great technology (like feature-cut “new” Pages, no-longer focused iBook store, etc): a lot of work for a relatively low margin.

        I really hate to see, how Apple becomes less and less important in Germany. Stupid advertising (or even none), late rollouts, etc. But Tim last week was here to visit the company who makes the tables for the Apple stores worldwide. Even the tables are nice, I’ve seen them in the Berlin store, there are more important things to do.

  1. Apple, forget the kangaroo shagging Australians. They’re a wild bunch of brash and broadly poorly educated people. Their manners are atrocious and all they can think about is BBQs and cheap lager. Access to the NFC chip on the iPhone must remain non negotiable.

      1. I know it’s not an alternative fact but maybe you can handle a real one.

        road war·ri·or
        a person who travels, often as part of their job, and does work at the same time.

    1. Are you American? If so, you REALLY should not get into a competition about who has more boorish, poorly educated citizens. And if a few are shagging kangaroos, at least they’re not shagging their cousins.

    2. LOL. Actually, Australians are very well educated. We have an excellent public school system, technical colleges and highly acclaimed universities – which attract large numbers of foreign students. We also have better television, vastly better news services and Australians travel a lot.

      We don’t drink lager in Australia. Its just beer. But we also make amazing wine – which wins awards in French wine shows. In fact, Australians drink more wine than beer these days. Especially at our excellent restaurants. Our winemakers are all over Europe, as are our chefs.

      The Australian banks want to retain control of the payments system which they own and run. In the USA, Apple’s major selling point to US banks was security – retail technology in the US is a long way behind Australia where chip cards have been in place for many years and “tap and go” is almost everywhere.

      No-one signs a card any more in Australia. So there is greatly less fraud risk for both the retailer and the card issuer.

      If Apple is going to have broad penetration in the Australian market they may have to give the banks what they want. Or not – who knows? But who cares? ApplePay is a lumsy way to pay if you are used to tapping your chip card on the terminal in the supermarket.

      And, as for manners, you are presumably not considering the behaviour of your oafish President…

      I don’t doubt that you have never been to Australia. Perhaps you should go and have a look. We have a great eating tradition called BYO – great food, but inexpensive, and often outdoors – and you can bring your own wine. You can buy American wine, and French of course, but you’ll find the best wine is local – and it won’t break the bank.

      … and if you are one of the 70% or so of Americans who don’t have a passport, get with it – see the world. You will be surprised just how sophisticated the rest of us are. And how educated…

      1. As long access to NFC does not mean access to the secure enclave, I think the banks have a point. Apple says it has a great product in Apple Pay. The banks are simply saying Apple has a monopoly on the iPhone if others can’t offer a similar payment method. To me, it seems more competitive and therefore more capable of driving innovation. The markets really do work – something a lot of us in the US have forgotten.

        1. This is pretty important for Apple to hold ground if they don’t want the NFC to be more accessible to 3rd parties the world over. On the other hand the longer they withhold the NFC access and banks hold firm the more time the alternatives will have to entrench themselves in the Australian market and improve to match/exceed the chipped cards.

        2. You can’t divorce the secure enclave from financial transactions. The enclave contains a processor that is required to make these transactions. They can’t run on the main processor and be secure. Apple is right to restrict it.

          1. I agree that you can’t divorce the secure enclave from APPLE PAY financial transactions. The banks are not asking for access to the secure enclave, but the NFC reader/emitter. They probably have ideas on how to secure their own financial data. Unlike ApplePay their App will probably not be storing more than that bank’s financial tokenizer so has no need to protect a large variety of CC numbers.

  2. SO nice that the big banks are so deeply concerned about the wellbeing of the consumer.

    And good that they make clear Apple should follow the “best practices” brought to the market by Android.

  3. The transaction fee isn’t the stumbling block with Apple, even though it’s already amazingly low. Apple could probably negotiate something with regard to fees if it really had to.

    It would be utter madness to risk compromising the security of Apple Pay by allowing people outside of Apple to gain access to the inner workings of iPhones. Apple would regard matters of security as non-negotiable. Those banks can forget any notions of tinkering with the NFC on iPhones. They must adopt Apple Pay, just as loads of other banks have already done, or else they can refuse to use it. Those are the only choices on the table and are the only choices that will ever be on the table.

    1. FFS: They don’t need to access the inner workings – they just need an API. Its no big deal and there is no security issue. But if the banks have their own wallets which talk to the NFC via an API, Apple wont be able to generate any revenue from the payments. That’s what this is about…

    1. If it were any other country’s bank I would agree but my parents used to live there and from what I saw of the bank policies there, they get a nice income from fees without Apple adding to the mess.

  4. Do these banks really think, that after they gain access to the iPhone NFC, they will be able to sell their app to a single iPhone through the app store? What a bunch of idiots. Even if they win, they lose. Then which court are they going to petition to complain about Apple’s app store approval process? Banks have had decades to figure out NFC, now they want a free ride on someone else’s bandwagon. I’m in favor of opening the NFC reader to other apps, but allowing apps to manipulate data sent from NFC has security nightmare written all over it.

    1. I think the Banks view is the NFC does not equal Secure Enclave and as a physical component of a phone should have accessible APIs usable by 3rd party App developers. They are also arguing for opening up the NFC for non-bank related features (“Open NFC access would enable the delivery of substantial public benefits to Australian consumers, not just in payments, but across retailing, loyalty programs, building or member lounge security, and other NFC-use cases.”) Which Apple does not seem to be planning to do anytime.

  5. That’s the most absurd statement I’ve seen in a long time. They practically admit that they just want some of the revenue.

    Apple, do not ever allow this cartel access to the NFC chip.

    It’s amazing that these supposed “Big Banks” have absolutely. I idea about the fundamentals of security.

  6. If Australian banks want access to the NFC chip on phones, maybe it should come out with its own phone. Let’s see how that works for them. While I wish Apple had use cases for NFC beyond their proprietary uses, I don’t want them to do it unless they partition that use away from their secure use. I laud Apple’s security policies.

    1. I think they don’t have to since those same banks are providing Apps on Android that allows access to the NFC (on equipped devices). This probably led to their current demand for Apple to ‘join’ the party by the banks.

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