The Australian Competition and Consumer Commission (ACCC) has decided not to grant interim authorisation to some of Australia's big banks to allow them to collectively negotiate and boycott activities with third-party mobile wallet providers such as Apple on conditions relating to competition, best practice standards, and efficiency and transparency.
The Commonwealth Bank of Australia, Westpac Banking Corporation, National Australia Bank, and Bendigo and Adelaide Bank had requested for the ACCC to grant interim authorisation within 28 days of their initial request made on July 27 to allow them to commence negotiations on limited issues while the consumer watchdog considers the application for authorisation.
ACCC chairman Rod Sims said on Friday that the ACCC has decided not to grant the banks that right, as it requires more time to make the decision. The Australian watchdog took into account the potential effect it would have on competition in the market, the extent of the urgency for the request, any possible harm to the applicants or other parties if the authorisation was or was not granted, and the possible public benefits and detriments.
"The ACCC has considered interim authorisation within a short timeframe at the request of the applicants. However, given the complexity of the issues and the limited time available, the ACCC has decided not to grant interim authorisation at this time," Sims said.
"The ACCC requires more time to consult and consider the views of industry, consumers, and other interested parties."
Sims said the ACCC expects to release a draft decision by October 2016, pointing out that the decision to not grant interim authorisation is not indicative of the outcome of the draft or final decision. He added that it's often a five- to six-month process to release a final decision.
A spokesperson on behalf of the applicant said the banks will continue to work in consultation with the ACCC until a final decision is made.
"This application seeks to ensure that Australian customers are able to choose between different mobile wallets to make payments easily. This application has broader industry benefits, too. A number of other Australian institutions have supported the ACCC granting the authorisation, including Heritage Bank, Tyro, and Indue," the spokesperson said.
In their initial submission, the banks said joint negotiations will help increase competition; provide greater customer confidence and choice, and more incentive for investments; and bring greater potential for innovation in other industries.
They outlined that the main goals they want to achieve, if granted the authorisation to negotiate with the likes of Apple, are to ensure that there will be non-exclusive access to a mobile near-field communication (NFC) chip, which would open it up to opportunities for other third parties, such as retailer loyalty programs or transit companies, to access the wallet; standardised security standards across the mobile payment system; and price transparency for payment system transaction costs in Australia, which is in line with the Reserve Bank of Australia's policy.
Apple hit back at the banks, accusing them of being control freaks and urging the commission to reject granting the banks interim authorisation, saying at the time that if the request was granted, it "would harm consumers, lead to less competition and less innovation, and create a troubling precedent".
"The present application is only the latest tactic employed by these competing banks to blunt Apple's entry into the Australian market," it said.
Apple also accused the banks of having a "limited understanding" of Apple Pay.
"The applicants rely on innuendo and misstatements to support their application. Most have little direct insight into Apple Pay or Apple's terms (case in point, one applicant bank has refused to even enter into a confidentiality agreement with Apple to allow for preliminary discussions about the terms under which it would participate in Apple Pay)," it said.
Meanwhile, South Australian Small Business Commissioner John Chapman signalled that he opposed giving the banks authority to collectively negotiate, raising questions around why the banks had deliberately avoided the "thorny issue" of fee negotiations from their application, leaving fee negotiations up to individual banks to negotiate with wallet providers.
"To me, the applicants' reluctance to agitate the fees that they may need to pay to Apple (or how those fees might need to be recouped for their shareholders), is a telling indicator of the applicants' reluctance to shine any light on issues that may have the potential to cause them public discomfort," he said.
Chapman believes the banks, including ANZ, will inevitably seek to recoup any fees or charges they give up to Apple, by recovering them from merchants, consumers, or both.
Novantas senior advisor Lance Blockley on behalf of the banks recently revealed that ANZ had initially lined up to join the fight, but then changed tack and joined with Apple Pay.
"One of the applicants was ANZ Bank," he said.
"They chose to pull a fast one on their competitors and their joint applicants earlier this year when they withdrew from the group of applicants and decided to negotiate separately with Apple."