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Apple’s Clash with Banks Over Apple Pay & NFC Chips

Posted on August 29, 2016

You’ll recall that Apple recently got into a row with four large Australian banks (Bendigo and Adelaide Bank, Commonwealth Bank, NAB, and Westpac) over Apple Pay and their NFC (near field communication) mobile payment hardware. For those who are unaware, Apple Pay allows iPhone and Apple Watch users to make convenient, contactless retail payments at various outlets instead of a credit or debit card. The banks joined forces to resist signing deals to use Apple Pay, and (from Apple’s perspective at least) stifle their ability to compete. In a formal complaint to the Australian Competition and Consumer Commission (ACCC), Apple argued that the bank’s collective resistance amounts to the actions of an organized monopoly.

They say the banks are trying to dictate terms of newer forms of payment (Apple Pay included), and in general, reduce innovation to maintain an unfair advantage. Also, they countered requests from the banks to allow access to the NFC radio to use their own apps and obtain a portion of the profits Apple gets from each Apple Pay transaction (effectively granting them a piece of Apple’s pie, as it were). Apple was insistent that such a move would compromise security. They accused the banks of being greedy, and wanting to maintain “complete control over their customers.”

For now, at least, it seems the matter is at a standstill. ACCC chairman, Rod Sims, is of the opinion that both Apple and the banks may be acting in an anti-competitive fashion. Apple by preventing bank access to iPhone, and the banks by attempting to bully Apple collectively on important negotiation points. According to Sims, the ACCC will not provide a determination on the matter until October. Sims said that they take Apple’s claims of potential security compromises seriously, but do not believe it is a justification for any anti-competitive behavior on their part.

The banks claim that they merely want customers to be able to “choose between different mobile wallets to make payments quickly.” While some are in agreement with this, others see the banks as an aging institution that has been outmaneuvered by rapidly advancing technology. They believe the banks are falling back on a strategy of fear, greed, and stubbornness to protect their bottom line. Others still see no angels in this fight. Reasoning that the banks are indeed anti-competitive and monopolistic, but they’ve just been outdone by a more skilled operator in the same game.

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