ACCC Apple Pay decision prevents customer choice, says Westpac

Alison Banney 5 April 2017

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Westpac disagrees with the competition regulator's recent decision to deny CBA, Westpac and NABs request to collectively negotiate with Apple over Apple Pay.

Last week the Australian Competition and Consumer Commission (ACCC) denied an application by NAB, CBA and Westpac to collectively negotiate with Apple over access to Apple Pay and the NFC contactless payments features on iPhones. This means that the banks cannot offer their own digital wallets on the iPhone.

Prior to the decision George Frazis, CEO of Westpac consumer bank, had downplayed the banks battle over Apple Pay, and implied it was not worried by the ACCC's impending decision.

Frazis told the Australian Financial Review: “From our perspective, at this stage we are not seeing any negative impact as a result of not providing Apple Pay.”

However Frazis backtracked today at the AFR 2017 Banking and Wealth Summit where he revealed just how much the bank wants to be able to offer Apple Pay to its customers.

“We want to be able to offer Apple Pay to our customers. If you think about what we’re arguing, it’s really for customer choice. They (the customers) have purchased this iPhone and effectively what Apple is doing is barring the NFC chip from any other application that you may want to put on when it comes to wallet," Frazis said.

“It’s essentially like barring the GPS on the iPhone to Google Maps and you have to use Apple Maps, and I tell you what you’d have a whole lot of customers that are not too happy about it."

Frazis said he respected the regulator's decision, but clearly disagreed with it.

Rod Sims, chair of the ACCC, explained the regulator's decision to bar NAB, CBA and Westpac from collectively negotiating for Apple Pay, and addressed Frazis’ points regarding consumer choice.

“To some extent we felt we were being asked to force Apple into the same competitive approach as Android was taking, and we felt intervening in that Apple versus Android competition was something we were wary of,” Sims said.

“The approach Apple is taking is fostering people into coming up with new ways of trying to get near field communications...so that could also be pro-competitive rather than just channel everything through Apple.”

Sims also suggested the regulator had concerns that if all the Big Four banks offered Apple Pay, customers would not be inspired to make changes with their banking, which does not represent a healthy, competitive market.

“I guess we had some concerns that the banks would want to just increase inertia by getting people involved in a digital wallet that might increase the bank's capture over customers,” said Sims.

It is likely that the banks will now try to score individual deals with Apple. Of Australia's Big Four banks, so far only ANZ has negotiated a deal with Apple for Apple Pay access. Amex and several credit unions have also scored similar deals.

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