Apple: “This is not open to negotiation with any bank”

Angus Kidman 31 August 2016


Apple turns up the heat in its battle with Australian banks.

Having written about the latest developments in the Apple Pay wars in Australia for the most recent Findings column, I was planning to dedicate today's piece to an entirely separate topic, like superannuation or airlines or BBQ Shapes. However, with Apple's detailed submission to the regulator becoming public yesterday, it's worth at least briefly examining what it has to say.

Apple first responded to the Australian Competition and Consumer Commission (ACCC) in a letter released earlier this month, and its argument boiled down to three basic ideas: third parties can't be trusted to keep iPhones secure; the banks haven't tried very hard to negotiate with Apple over terms; and there's so much competition in the mobile wallets and payments space that there's no need for the regulator to intervene.

That remains Apple's essential position in its detailed response, but there's a lot more detail: it runs to 65 pages and includes a lengthy white paper authored by an independent economist. Running to that length means we get a little more insight into Apple's view of the issue.

The paper completely confirms a key point I made yesterday: Apple is absolutely not open to allowing third-party apps to use the iPhone's NFC antenna. "Much of the applicant banks' application relates to their desire to have direct access to the NFC antenna contained in Apple devices," it reads. "This is not open to negotiation with any bank."

We also get more detail on the extent to which the banks which have applied (CommBank, NAB, Westpac and Adelaide & Bendigo Bank) have sought to negotiate a deal for Apple Pay access:

Apple has tried, and failed, to negotiate commercial terms with each of the applicant banks except one, which has not even been willing to sign a confidentiality agreement and thus has not yet been provided with a copy of Apple's initial terms . . .As each of the banks has individually resisted serious engagement with Apple for the past two years, collectively negotiating will further entrench the applicant banks' position by ensuring that all of them can only advance in lockstep with the slowest, least willing member. The applicant banks would know that they can continue to hold out without the threat that one of their competitors will introduce Apple Pay for their customers, which could result in the loss of some customers who will switch banks in order to access Apple Pay.

It seems unlikely that the ACCC would authorise collective negotiations for a bank which hasn't even tried to negotiate a commercial deal. (Granted, we only have Apple's word that this is the case right now.)

One other interesting titbit: apparently a "significant number of Australian customers have attempted to provision their currently ineligible cards (such as cards issued by the applicant banks) onto Apple Pay since its launch with American Express and ANZ, which demonstrates that there is unmet demand for Apple Pay". (We've rounded up the cards that are eligible to save you similar embarrassment.)

The ACCC isn't likely to make a decision on the major banks' application for collective negotiation for some months. If this response from Apple is any indication, the fight will continue if it does decide to authorise those negotiations - and the smart money remains on the ACCC saying "no".

Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears Monday through Friday on

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