news Ed Husic, the Member for Chifley in Sydney, said this week that Australian consumers are being denied payment choices over the banks’ apparent “boycott” of Apple Pay.
Making his comments in letters to the Australian Banking Association and the Reserve Bank of Australia (Payment Systems Board), Husic further called for “technology neutral” regulation to avoid consumers suffering from the possibly “anti-competitive” actions of some financial institutions.
Apple Pay is a fast and secure contactless payment app for iOS devices released in the US in 2014. It was launched in Australia on 20 November 2015, with a limited number of participating retailers and support by just one credit card company, American Express.
Owners of Apple iOS devices, such as iPhones, can use the app in place of their physical credit card, paying for goods and services at participating businesses with a wave of the device over a compatible payment terminal.
Apple Pay now has around 750 banks facilitating its use in the US, according to the MP.
However, Husic said: “It comes as some surprise to learn of claims that Australian banks have refused to mirror this support – appearing to effectively boycott the service, taking away the right of Australian consumers to access a payment system they may prefer.”
Various reasons are being cited for this decision by the banks, he went on, including “a preference to drive customers to use the banks’ own payment platforms and a strong negotiating position by the banks in relation to transaction commissions being demanded by Apple”.
While agreements between Apple and the banks are not made public, the tech giant receives about 15 cents from every $100 transaction in the US, and “significantly less” in the UK, according to the The Financial Times.
Husic said it has been suggested that some credit card companies have resisted working with alternative payment systems such as Android Pay and Apple Pay on commercial grounds.
“Australian consumers,” he said, “should not be denied the ability to make payment choices that are openly available to consumers globally.
“No doubt some will argue this move by the banks is anti-competitive – I am certainly concerned that it denies consumers access to a secure, efficient payment platform. While I welcome the fact that the Apple Pay system is available via American Express, it should be noted that this payment mechanism usually attracts a higher transaction cost. What is noteworthy is that some in the payments systems sector have called for a more liberalised approach.”
The MP did acknowledge that commercial negotiations may “occasionally frustrate” the introduction of new payment methods, but it “shouldn’t unduly delay the emergence of new methods”, he said.
“Neither should there be a delay because some banks want to drive customers onto their own individual technology platform ahead of other platforms,” Husic said.
“On this basis I would urge the RBA — more specifically the PSB — to consider the introduction of enhancements to the national payment systems framework to encourage greater tech neutrality and enhance consumer choice.”
Image credit: Parliamentary Broadcasting