Echoes of The Past: Australian Banks Reenfocan Its Strategy against Apple Pay

New episode in the war against Apple Pay by some Australian banks. Financial institutions they have abandoned their initial argument where he warned of the danger to free competition from the entry of Apple Pay. In this first phase, they supported his case arguing that the fee charged by Apple for each transaction with Apple Pay (0,15%) was too high.

Now, once the Australia competition Commission rejected that line of attack, the banks opposed to Apple Pay they want Apple to open access to the NFC chip of your devices (Apple Watch and iPhone). A claim that they did at the beginning but that it has become the main argument of the banks.

“There is no real competition in mobile payments”

According to reported AppleInsider yesterday, Commonwealth Bank of Australia, National Australia Bank, Bendigo and Adelaide Bank and Westpac Banking Corp. they have redirected their efforts to disrupt Apple mobile payment platform in order to use free the NFC chip. According to the spokesman of the Group of banks, Lance Blockley:

Free access to NFC function, as occurs in the operating system Android mobile more popular and widely used, is not only important for the participants and mobile payments, but also for a wide range of functions that use the NFC throughout numerous industries and applications. This has global implications in the use of NFC in smartphones.
Participants expect to offer Apple Pay to its customers at the same time having access to NFC functionality. Any delay or impediment will result from the refusal of Apple to negotiate.

It’s a somewhat contradictory statements, since these same banks claim that “there is no real competition” in mobile payments and at the same time mentioned to Android as an example to imitate. How is that there is competition in mobile payments when it possible Android has more than 52% of the market share in Australia (iOS tendría un 45%), according to data from Kantar for December 2016? Precisely when Android, as they say, is open and with full access to the NFC chip.

Who are the Australian banks and are opposed to Apple Pay?

In the image above you can see the ranking of the four largest banks in Australia, based on the size of their assets in Australian dollars. Here would be missing one of the demanding banks, Bendigo and Adelaide Bank, whose assets amounted to 65,700 dollars million, far behind the Westpac.

And also appears the Australia and New Zealand Banking Group (ANZ), the only National Bank of large size in adopting Apple Pay in the summer of last year. Besides the ANZ and the traditional American Express, ING Direct and Macquarie hopped on the bandwagon of payments of Apple a few days ago.

Apple is not willing to compromise the security of its mobile payment system giving access to third parties to its NFC chip

Financial institutions want access to the NFC’s iPhone to its mobile payment platforms have easy access in the face of the user. Currently, Apple Pay is activated with just a compatible iPhone approaching a point of sale (POS) or by pressing the button on the side of the Apple Watch twice. The confirmation of the payment in the case of the iPhone is done by Touch ID

In contrast, to gain access to a payment from a bank app, user must unlock the terminal, search the app from your bank, open it, find the option of payment and pay. A much more laborious process in a situation in which the speed and comfort. His desire to have free access to the NFC chip from Apple is evident, but as already said the company last year:

Apple maintains very high security measures to our customers when they use Apple device to make payments. Provide simple access to antenna NFC to banks apps would decrease fundamentally this high security level that Apple seeks to maintain in their devices.
Unfortunately, based on their limited understanding of the system, the banks perceived to Apple Pay as a competitive threat. These banks want to maintain complete control of your clients. This application is just a new tactic employed by these banks to crush Apple to enter the Australian market. Of being granted, the request would harm consumers, leading to less competition and less innovation.

The safety of Apple and their devices is very high, but it is not perfect. Add an external variable which is beyond the control of the company is unthinkable at something as critical as mobile payments. Not to mention the personal information that Apple Pay makes anonymous during the transaction. In a world in which Governments they aspire to monitor even more information about their citizens, the refusal of Apple is even more understandable.

Déjà vu: the initial exclusivity of the iPhone and Apple Pay

The situation that we live with the global expansion of Apple Pay has echoes of the past. When Apple launched the iPhone in 2007, He did so exclusively with a single operator telephone in each country. This was true in the early years. In Spain, Movistar had this exclusivity from 2008 to 2010, year where he joined Vodafone and Orange.

Apple used this strategy to ensure budget of promotion in each country at the same time that weakened the bargaining power of the more reluctant operators. Until 2007, were they who dictated to manufacturers which phones should create, features, services came preinstalled and where to place the operator logos.

The iPhone changed it completely, giving you the power of negotiation to Apple thanks to the iPhone was a much desired handset by the most valuable customers of operators. Several operators denounced these agreements of exclusivity in the courts of their respective countries. But in the end, it was Apple who finished with these exclusive contracts.

The situation of Apple Pay and reluctant banks recalls when the company launched the iPhone in 2007

The case of Apple Pay is similar but with a few differences. Apple Pay is not exclusive of any bank, since they can join those who so wish. However, this opening is not at all welcome in cases Australian and Spanish. To overcome these reservations, Apple has partnered with two key entities: ANZ and Banco Santander (in addition to Amex, Ticket Restaurant, Carrefour Pass).

The risk that run the rest of financial institutions is the same as that of the mobile operators in 2007: losing the most valuable customers. In this case, a very interesting fraction of customers most likely embrace a mobile payments platform. The Bank “portability” are more difficult (change of Bank when you have a mortgage isn’t easy), but probably you are giving young customers with few obligations changes banking. Customers that in the future they will hire more banking products in the future (again, mortgages).

According to the global head of Apple Pay, Jennifer Bailey, Australians are using Apple Pay more than in any other country. We will see how it impacts the órdago that ANZ and Banco Santander have launched on the market and how it operates the affaire Apple Pay in both countries. But everything points to a predictable result. As it happened with the iPhone, all you have to do Apple is expected.