The Commonwealth Bank of Australia, National Australia Bank, Westpac, and Bendigo and Adelaide Bank have all lodged applications with the Australian Competition and Consumer Commission (ACCC) to seek authorisation to join forces to enable them to collectively negotiate with third-party mobile wallet providers, such as Apple, on conditions relating to competition, best practice standards, and efficiency and transparency.
As an initial first step, the banks have collectively requested for the ACCC to grant initial interim authorisation within the next 28 days to allow them to commence negotiations on limited issues while the consumer watchdog considers the application for authorisation.
The application submitted to the ACCC outlined the main goals the banks want to achieve through negotiations: Ensuring 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.
According to the banks, they believe joint negotiations will help increase competition; provide greater customer confidence and choice, and more incentive for investments; and greater potential for innovation in other industries.
More specifically, the application pointed out that unlike banks facing a number of regulatory obligations and restrictions, third-party wallet providers do not, therefore increasing their bargaining power significantly.
"Collective negotiation will be required in Australia to overcome the disadvantages the applicants will face in individual negotiations (in terms of size, bargaining power, and regulatory and information asymmetries), and to achieve the most efficient and optimal outcome that will preserve and increase competition and best practice principles in mobile payment and mobile wallet services," the application said.
The banks, however, noted that the negotiations will exclude collective negotiations on fees, leaving fee negotiations up to individual banks to negotiate with wallet providers.
Currently, based on US figures, Apple charges on Apple Pay 0.15 percent of every credit card transaction and 0.5 percent per debit card transaction. Meanwhile, in Australia, Samsung Pay and Android Pay do not charge banks any fees.
Additionally, the banks have also requested the authorisation to enable the arrangement to be extended to other card issuers that decide to participate in the collective negotiation.
"This is about providing Australians with real choice and better outcomes. 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," said Novantas senior advisor Lance Blockley on behalf of the applicants.
Blockley added that the banks want to resolve the issue before Sydney's Opal transport system opens up next year to allow direct payment with debit and credit cards.
"It's very hard to use your wallet because, if you have more than one card in there, the antennae clash and the touchpad doesn't know which card you want to use," he said.
"On a phone, there's only one antenna and you can choose which is your default card. In London, there's been a significant uptake in people using their phones to tap on and off."
Blockley 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."
Meanwhile, rival Samsung Pay, which launched in June, is being offered by a range of banks including ANZ, St George Bank, Westpac, ING Direct, and Bendigo Bank.
Earlier this month, Google's Android Pay arrived to Australia's shores, signing on initial partners including ANZ Bank, American Express, Macquarie Bank, MyState, and Teachers Mutual Bank.