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Will Apple Pay really encourage people to switch cards?



Apple says a single wallet encourages competition, but the evidence is mixed.

The Apple Pay versus most of the Big Four banks stoush rumbles on. While the Australian Competition and Consumer Commission (ACCC) issued a preliminary judgement in November suggesting that Apple couldn't be forced to negotiate with banks collectively, it hasn't yet made a final decision. That means the ACCC is still taking submissions, and Apple added to the pile it has already contributed with a new document that was made public recently.

Some of the document revisits familiar ground from this case: Apple arguing that security will be violated if anyone else uses its NFC chip for payments and that banks are scared of competition. One tantalising section labelled "recent developments" has been entirely redacted, along with figures for how many times major bank apps have been downloaded in Australia.

But one claim is worth examining in a little more detail: that Apple Pay will make it more likely that customers will switch between cards to take advantage of bonus offers.

Here's what Apple says on that point:

Apple Pay fosters competition between payment card issuers at the point of sale due to the ease with which customers can switch between cards within the Apple Wallet app. This is not possible within the banks' own proprietary issuer digital wallets, which limit the choice for the customer to only payment cards issued by that bank . . . It is easy for consumers to set a certain payment card as the "default" card and switch between payment cards, so card issuers offer consumers discounts and promotions to convince consumers to use their payment cards in Apple Pay. Apple expects that, with a range of payment cards available in Wallet in Australia, the same increase in competition between issuers for payment services is likely to occur in Australia as has been evident in these other jurisdictions.

By way of example, Apple includes promotions that have run overseas, including getting extra frequent flyer points or free credit at McDonald's when you use a specific card with Apple Pay.

I'm all for consumers taking advantage of bonus offers for their credit cards; our regular Rewards Roundup highlights all the ones we can find each week. So if Apple Pay brings more of those offers to the market, well and good. But I'm sceptical that these offers, in themselves, will induce people to sign up for multiple cards and then constantly switch to score the best bonuses.

That's largely a matter of psychology. Part of the appeal of contactless payments is that they require almost no effort. They reward the lazy, not the diligent. Most people will end up using the default card all the time, even if they have other choices. And even enthusiastic points collectors have their limits, not least of which is that applying for too many cards can actually impact your credit score.

Nothing has really changed. It seems unlikely that the ACCC will change its mind when it issues its final decision. There are still plenty of choices if you want a card that supports Apple Pay, so there's no real need to wait.

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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