Why Apple Pay hasn’t launched in Australia
Americans have enjoyed tap-and-pay for iPhones since 2014, but Apple's negotiations with Aussie banks aren't going so well.
Before Apple Pay can launch in any country, Apple has to negotiate with banks in order to have access to the local payments system, and link individual iPhones and users to credit cards and bank accounts.
The AFR reports today that a major sticking point in negotiations with the 'Big Four' banks in Australia is the fee that Apple will collect whenever a customer uses Apple Pay. Naturally, Apple wants this fee to be as high as possible; the banks want the reverse.
In the US, Apple is reportedly collecting around 15 cents for every $100 spent on Apple Pay. It wants a similar fee in Australia. However, the AFR notes that Australian banks are resisting, in part because the overall "interchange fee" charged on payments is lower here.
Interchange fees in the US amount to roughly $1 on a $100 transaction. In Australia, the figure is closer to 50 cents. Therefore, 15 cents represents a much higher proportion that the banks would lose. The Reserve Bank is also pushing for interchange fees to be lowered further. While the amounts involved might seem small, they add up: interchange fees are worth more than $2 billion in Australia each year.
Apple may well decide to bite the bullet and accept a lower fee (as it did when Apple Pay launched in the UK last month). Getting into the market early would give it a potential edge over rival Samsung, which is planning to launch Samsung Pay in Australia in 2016.
That said, Aussie consumers might not hang around and wait. Contactless payments already account for a large chunk of the local market. More than 53% of Australians have used a tap-and-pay credit card, according to a study by RFi Group. CommBank and Westpac both offer apps that allow tap-and-pay using smartphones.