Several of the country's big banks are seeking to join forces and negotiate as a bloc with technology giant Apple, which could lead to a collective boycott of Apple Pay, in a bid to offer "digital wallets" on the iPhone.
Commonwealth Bank, National Australia Bank, Westpac and Bendigo Bank have this week applied to the Australian Competition and Consumer Commission, asking permission to negotiate as one with Apple.
Their application also seeks permission to undertake a "limited form of collective boycott," in which the banks will agree not to negotiate with Apple individually while the collective talks are occurring.
In what the banks say is a world-first, they want to team up in talks with Apple over the access it gives businesses to its near field communication (NFC) hardware, the technology that allows phones to make tap-and-go payments.
The ACCC must give permission for rival commercial businesses to undertake collective negotiations in this way. The regulator's interim decision is expected in about a month. This would allow the collective bargaining to begin then, if the watchdog gives the banks the green light.
Unlike Android phones, iPhones only allow the manufacturer's system, Apple Pay, to access the NFC component.
This prevents banks and other businesses from offering "digital wallets" that are capable of making tap-and-go payments on the iPhone, the lenders claim.
Negotiating for access
In order to allow customers with iPhones to use their phones for payments, banks must develop a work-around - as CBA does by placing a sticker on the back of iPhones for tap-and-go payments - or they must sign up to Apple Pay, which potentially involves sharing millions of dollars in revenue from credit cards.
The banks say they are only seeking to negotiate as a bloc on access to the NFC technology, not on fees, which would still be set by each institution. Consumers would benefit if Apple opened up access to NFC technology, they argue.
"This is about providing Australians with real choice and better outcomes," said Novantas senior advisor Lance Blockley, speaking on behalf of the banks.
"If successful, the application would have tremendous benefits for the entire Australian mobile payments landscape including for public transport fares, airlines, ticketing, store loyalty and rewards programs and many more applications yet to be developed."
Banks are all competing to offer customers digital wallets, which allow payments on a phone. They say Apple's approach means third parties, which could also include retailers, are hampered from offering competitive digital wallets.
Banks see digital wallets as a critical way for lenders to maintain their position at the centre of their customers' financial lives. Given the high popularity of tap-and-go payments, ANZ Bank chief executive Shayne Elliott this month predicted paying on a phone could overtake plastic cards within less than a decade.
ANZ Bank is the only Australian bank that has signed up to Apple Pay so far, after it was launched with American Express last year.
It is understood ANZ was previously part of the bloc seeking to negotiate with Apple as a collective, before it broke ranks with the other lenders, and introduced Apple Pay for ANZ customers in April.
Apple's Australian arm has been contacted for comment.
