ACCC set to reject big banks' Apple bargaining bid

The ACCC has issued a draft decision denying a request from Australian banks to collectively bargain with and boycott Apple over deals to offer their own NFC payment alternatives to Apple Pay on iOS devices.

Commonwealth Bank, Westpac, NAB and the Bendigo and Adelaide Bank had applied to the ACCC seeking authorisation to collectively bargain with Apple over access to the devices’ NFC controller.

The request would also allow the banks to agree not to sign up to Apple Pay for three years as a negotiating tactic.

The banks also sought permission to collectively bargain over removing restrictions Apple imposes on banks prohibiting them from passing on fees Apple charges banks for the use of its digital wallet to consumers.

ACCC Chairman Rod Sims said the decision reflects the fact that the regulator is satisfied that the likely benefits of approving the joint action outweigh the likely detriments.

“While the ACCC accepts that the opportunity for the banks to collectively negotiate and boycott would place them in a better bargaining position with Apple, the benefits are currently uncertain and may be limited,” Sims said.

Banks have argued that the proposed action would increase competition and consumer choice in digital wallets, afford incentives to innovate and invest in digital wallet services while improving pricing efficiency.

“However, banks can already offer competing digital wallets on iPhones without direct access to NFC, through their own apps using Apple Pay payment technology, or using NFC tags. Banks can also offer digital wallets on the Android platform,” Sims said.

“Digital wallets and mobile payments are in their infancy and subject to rapid change. In Australia, consumers are used to making tap and go payments with payment cards, which provide a very quick and convenient way to pay. It is therefore uncertain how competition may develop with the availability of mobile payments and possible future innovations.”

The ACCC is also concerned that the proposed competition could reduce or distort competition by reducing the competitive tension between banks currently individually negotiating with Apple.

“Apple Wallet and other non-bank digital wallets could represent a disruptive technology that may increase competition between the banks by making it easier for consumers to switch between card providers and limiting any ‘lock in’ effect bank digital wallets may cause,” Sims added.

Finally, the ACCC believes that an agreement to collectively boycott Apple Pay would reduce choice for consumers with accounts at the participating banks.

Image courtesy of iphonedigital under CC