The four Australian banks that wanted to start their own mobile payments service using the near-field communications chips inside iPhones have been rebuffed, partly because Apple said that even if a ruling went against it the company would not have allowed them access to the chippery.
The Australian Competition and Consumer Commission's decision (PDF) found if the Banks were allowed to create their own mobile payment service using iPhones NFC chips it would deliver “a significant public benefit from increased competition, consumer choice, innovation and investment in mobile payment services.”
But it also noted that the four banks collectively hold almost two-thirds of Australia's consumer credit card market. The ACCC's decision therefore “considers that the Applicants’ incentives to favour their own wallets will limit the public benefits of increased competition between digital wallets.” The Commission also found that even if it granted access to iPhones' NFC, it would not notably accelerate uptake of mobile payments.
The decision also notes that the banks could easily bypass Apple Pay with an “NFC paytag”, an NFC chip on a sticker designed to be slapped onto any mobile phone. Your correspondent’s bank just sent one – they're not hard to come by in Australia.
But perhaps the most interesting aspect of the decision is that it says Apple would not have complied with a ruling that forced it to provide access to iPhones NFC chips.
“Apple submits that even if authorisation is granted it will not grant NFC access, and therefore the proposed conduct cannot lead to any of the public benefits claimed,” the ruling says. The Act under which the Commission operates allows it to fine those who choose not to comply with its rulings and there's also an avenue of appeal to the Courts.
The Register suspects Apple would gladly have taken the second option.
Among the downsides to allowing the four banks access, the Commission listed the likely slower adoption of Apple Pay in Australia and the negative effect that would have on iPhone owners. The decision also argued that locking down iPhones to Apple Pay and Apple Pay only is a conscious decision by Apple, made in the knowledge of open access to NFC on Androids, and that it would distort the market to allow open access to iPhones.
Here's the Commission's thinking:
If the Applicants are successful in obtaining NFC access, this would affect Apple’s current integrated hardware-software strategy for mobile payments and operating systems more generally, thereby impacting how Apple competes with Google. In particular, NFC access may involve modifications to Apple’s software or hardware that lessen the degree of differentiation between the iOS platform and the Android platform.
Another argument is that if the banks were allowed access it would skew Australia's mobile payments market to smartphones, making it harder for alternatives to get a toehold.
Australian regulators are well-regarded internationally and networked with their peers: The Register is aware of communication and occasional cross-pollination between the ACCC and The UK's Offcom. This decision is therefore likely to be noticed in legal circles if other organisations try to work around Apple. With “disruption” and “fintech” constants in Reg hacks' inboxes, such an effort may already be happening. ®