Banks Down Under Declare War on Apple

  • Philip Ryan
  • August 11, 2016
  • 1

© Can Stock Photo Inc. / kwiktorWhen Apple launched Apple Pay in 2014, it obtained advantageous terms for transactions, and banks seemed eager to be aligned with Apple’s brand.

A bit of the shine is off Apple Pay today due to low usage numbers, and some banks are playing hardball– at least in Australia. The banks involved are Commonwealth Bank of Australia, National Australia Bank, and Westpac Banking Corp.

Only ANZ — Australia and New Zealand Banking Corp. — has cut a deal with Apple down under and is listed as an Apple Pay partner on Apple’s site.

The disagreement now isn’t over Apple Pay transaction fees — though Apple’s discounts there may be in danger too — but rather over access to the NFC (near-field communication) transmitter in phones. This is how Apple Pay communicates with point-of-sale devices in stores.

The banks want access to that, to use their own mobile payments services. Apple contends that consumers trust it to protect their data and keep transactions private. Apple also says the banks are illegally colluding for purposes of negotiation, and has filed a motion with Australian regulators to put a stop to it.

Apple wrote to the Australian Competition and Consumer Commission that “allowing the banks to form a cartel to collectively dictate terms to new business models and services would set a troubling precedent and delay the introduction of new, potentially disruptive technologies.”

Experian’s Cherian Abraham tweeted that he did not see merit in Apple’s position.

Brian Roemmele, CEO of the mobile payments location service PayFinders, notes that Apple has made a promise to consumers it must uphold, and that means denying the banks use of the NFC radio — for now.

“The manner in which Apple uses NFC is secured via the Secure Enclave — this forms a trust channel on two levels, from a technology point and from a psychology point,” he wrote Bank Innovation.

“There will be a form of open NFC from Apple at some point,” Roemmele said. “However there will be blocks so as not to breach the concept of private transactions. Apple will not accept any company that will trace and sell consumer transaction data processed via the NFC channel, as it would conflict with the premise of full privacy of Apple Pay (even though it is not Apple Pay), the consumer assumes this channel affords.”

Roemmele believes the bank effort in Australia will fail, but that when Apple opens NFC, the banks will be happy, and the transactions will be secure and maintain consumer trust. The reason Apple is so careful, Roemmele said, is that NFC is special. (It certainly caused Google trouble way back when.)

“The proper way is not to make NFC just another ‘port’ like Bluetooth,” Roemmele said. “NFC is branded as Apple Pay with the notion of some assumptions on what the consumer perceives. It is important to note the consumer does not really know NFC from EMV from even Bluetooth. They just know that Apple Pay works and assumes the promise Apple makes about security and privacy. The banks know this, of course.”

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Philip Ryan is Senior Editor of Bank Innovation and Senior Director of INV Fintech. He began covering financial services in 2012 and has more than 15 years' experience in online journalism. He can be reached at

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