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Apple tells Australian banks: Your security isn’t good enough


The war over access to Apple Pay and NFC looks set to run and run.

Unsurprisingly, Apple isn't just giving in to a proposal from Australia's biggest banks arguing that it needs to open up access to payment technologies on iPhones.

As we reported last month, CommBank, NAB, Westpac and Adelaide & Bendigo Bank have applied to the Australian Competition and Consumer Commission (ACCC) for permission to collectively negotiate with Apple. (Google is also named, but Apple is the key target.) The banks want to be able to use the built-in features of the iPhone, most notably its NFC chip, to enable tap-and-go payments in their own banking apps. They also want to negotiate a lower rate for using Apple Pay itself than Apple wants to charge.

Apple has now lodged a preliminary response with the ACCC, arguing against the interim authorisation: "If granted, the request would harm consumers, lead to less competition and less innovation, and create a troubling precedent." Apple's response notes that the banks involved account for 66% of credit card balances in Australia. In a rare-for-Apple moment of hubris, the letter adds: "Given their scale and market share, the applicants are essential to Apple's ability to offer Apple Pay on a meaningful basis within Australia."

After that brief compliment, Apple then goes for the jugular, suggesting that the banks want to negotiate lower rates to reduce competition and arguing that allowing anyone else access to the iPhone's NFC technology would create unacceptable security problems. Doing this would "force Apple to undermine the security of its mobile payment service by opening access to the NFC antenna, placing at risk the consumer experience of a simple, secure and private way to make payments . . . providing simple access to the NFC antenna by banking applications would fundamentally diminish the high level of security Apple aims to have on our devices". Rather than issuing an interim authorisation, the ACCC should take the full six months allowed by law to examine the application, Apple suggests.

The only Big 4 bank not involved in the negotiations is ANZ, which not-so-coincidentally is the only one which already offers Apple Pay. ANZ argues that it makes more sense to use technology built by others rather than try and solve everything itself.

A preliminary judgement is widely expected within a month, although it's possible the regulator will indeed take the full six months before issuing its final ruling and may not say anything prior to that. Six months is an enormously long time in tech; by then, we can expect to see the iPhone 7, for example. Bear in mind that even if the ACCC authorises the collective negotiations, that doesn't guarantee a successful outcome. Get your popcorn, we'll be here for a while.

While I'm sure many iPhone owners would enjoy using Apple Pay, the reality is that Australians already have the highest use of contactless payments in the world. For Apple, the real risk is that a failure to come to an agreement with the Big 4 banks will mean Apple Pay isn't a major player in the Australian scene.

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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