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Banks' bid to board iPhones' NFC chips rebuffed

Competition commission cans anti-Cupertino cartel

By Simon Sharwood, 30 Nov 2016

The four Australian banks attempting to use iPhones' near-field communications chips for their own payment services, and not Apple Pay, have all-but failed.

Australia's Commonwealth Bank, National Australia Bank and Westpac together control about 70 per cent of the nation's credit card market. Together with minnow The Bendigo and Adelaide Bank, they asked Australia's Competition and Consumer Commission (ACCC) to allow them to negotiate as one with Apple.

Apple countered by saying third-party access to the NFC chippery would compromise iPhone security. Cupertino also pointed out that one of the four applicant banks hadn't even bothered signing a non-disclosure agreement that would have let it open negotiations about using Apple Pay, suggesting the dispute was more about defending a lucrative credit card business than issues of equal access.

The ACCC has now issued its Draft Determination (PDF) on the issue and decided that while the Banks' application has some merit, the benefits for the iPhone-using public are minimal.

Among the reasons advanced are that the four Banks, and consumers, have a very fine alternative in Android and its open access to embedded NFC devices. The ACCC also feels that the digital wallet industry is evolving so quickly that it's hard to see if the cartel would gain lasting benefits.

The Commission also notes the four Banks' submission asks for up to three years of negotiations and feels this may represent delaying tactics that would hardly help consumers and indeed could create uncertainty that retards uptake of all digital wallets.

On security, the ACCC had this to say:

“While the ACCC is not satisfied on the information available that third party access to the NFC would necessarily compromise Apple’s offering or the security of Apple Wallet and Apple Pay, the ACCC is concerned that the Applicants’ objective of securing direct access to the NFC controller in iPhones may impact on the consumer experience offered by Apple’s competitively differentiated approach to offering an integrated smartphone platform.”

Which doesn't sound good for the Banks.

Competition regulators watch each others' activities, so this decision will be noted around the world if other financial institutions try to get their paws on iPhones payment parts.

They'll also watch the consultation process that follows the release of the ACCC's Draft Determinations, as stakeholders get a second chance to explain themselves. A Final Determination is the next step and they seldom diverge markedly from the Drafts that precede them. ®

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