Apple Pay Australia: ANZ gloats while Google fumes

Angus Kidman 30 August 2016

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ANZ has 250,000 customers using Apple Pay, and is now extending to MasterCard.

While the rest of Australia's big banks are still waiting for the regulator to decide if they can collectively negotiate for access to Apple Pay and the iPhone's NFC chip, ANZ appears to be reaping the rewards of going along with Apple's demands.

ANZ was the first Big Four bank to offer Apple Pay in Australia, first offering the service in April. Today ANZ is extending the ability to use Apple Pay to MasterCard customers; previously, you needed either a Visa or Amex card from ANZ to use it. (It's also extending Android Pay to its MasterCard customers.)

ANZ says that around 20% of eligible customers (that is, iPhone 6 owners with a suitable card) have signed up for Apple Pay so far. While the bank itself won't say how many people are using it, media reports suggest the number could be around 250,000. That's a big enough number that ANZ is presumably happy with Apple taking a decent slice of transaction costs, which has been one of the big sticking points for other banks negotiating to use Apple Pay.

The other sticking point is that you can only use Apple Pay through Apple's own app; there's no allowance for integration with other mobile banking or wallet apps. But Apple isn't alone in wanting to control its own platforms.

While Apple has been the focus of the battle between Australian banks and payment service providers, the application to the Australian Competition and Consumer Commission (ACCC) also seeks leave to negotiate with Google over access to Android Pay. In its own submission to the ACCC, Google makes it clear that it won't be having a bar of that, and that it isn't quite sure why it has been included in the application.

Given that Android Pay is already available through 28 banks locally, access clearly hasn't been the same issue as it has for Apple Pay. More tellingly, Google's submission points out that, unlike with iPhones, there's no barrier to banks creating their own payment platforms using NFC for contactless payments:

There are numerous mobile wallet services available on Android, including from some of the applicants themselves. The fact that Google is the developer of the Android operating system gives it no particular advantage in the offering of mobile wallets because Android's open API for NFC creates a level playing field and because Google does not condition access to Android on installing or using Android Pay.

Given that, why would the banks want the right to collectively negotiate? The main reason would be to try and score a better deal financially, by giving Google a smaller cut of each transaction. While that's commercially reasonable behaviour, it seems very unlikely that the ACCC would authorise a collective negotiation over the issue. It only allows collective negotiations when there is a significant threat to competition, and arguing over fees on a platform that dozens of companies have signed up for wouldn't seem to fall into that category.

What's the likely endgame here? Ultimately, the Android Pay (and Samsung Pay) issues are a sideline. The ACCC won't make a decision on collective negotiations with Apple for some months. Even if it allows the collective negotiations (and the associated boycott), that still won't force Apple to grant access to Apple Pay. And frankly I can't see that ever happening; Apple is large and stubborn and rich, and now it has two successful Australian partners (ANZ and American Express). Ultimately, everyone will have to learn to play nice.

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 finder.com.au.

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