Google wants guaranteed negotiation protection from Australia's big banks

Google has requested for the ACCC to ensure that if some of Australia's banks are given the right to collectively negotiate with Apple, its Android Pay service will be excluded.
Written by Aimee Chanthadavong, Contributor

Google Asia Pacific (GAP) has requested for the Australian Competition and Consumer Commission (ACCC) to probe whether some of Australia's big banks plan to eventually extend their request to collectively negotiate with third-party mobile providers such as Apple on conditions relating to competition, best practice standards, and efficiency and transparency to Google for its Android Pay service.

The Commonwealth Bank of Australia, Westpac Banking Corporation, National Australia Bank, and Bendigo and Adelaide Bank had put in their initial request with the ACCC at the end of July.

The main goals the banks want to achieve included 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.

However, the ACCC recently denied the banks the interim right to negotiate to allow them to commence negotiations on limited issues while the consumer watchdog considers the application for authorisation.

ACCC chairman Rod Sims said the watchdog needs more time to make a decision.

In its submission, Google has requested for the ACCC to ensure any collective bargaining will not impact its Android Pay service, noting that given Android's API for NFC is open, it already creates a level playing field.

"If that confirmation is not given, GAP respectfully requests that any grant of authorisation not extend to any negotiations related to Android Pay," it wrote.

"In addition, GAP reserves the right to submit a response to the Applications demonstrating that there is not basis on which authorisation should be granted in respect of any negotiations related to Android Pay."

Google launched Android Pay in Australia last month with a number of banks, including ANZ, which is currently one of only two banks that have signed up to offer Apple Pay in Australia after it launched in November last year.

Missing from the list of banks supporting Android Pay are the ones that have filed for collective negotiation. However, the list does note Bendigo Bank, Westpac, and St George are "coming soon".

Visa also put forward its submission to the ACCC, expressing that it supports the banks' push to collectively negotiate with the likes of Apple, under the condition the outcome is to promote safety, security, and stability, as the banks had initially stated in their application.

"Visa acknowledges that industry standards can provide many pro-competitive benefits," the company said.

At the same time, Visa pointed out that given the banks did not outline in their application what specific standards the ACCC should consider, it said could be difficult to assess what impact giving permission to the banks to collectively bargain would have on industry standards.

Recently, Australian retailer giant Coles, the Australian Payments Clearing Association (APCA), and the Australian Retailers Association (APA) all expressed support for the banks, arguing it would improve transparency of costs related to credit card processing fees, improve the experience for customers, and encourage greater innovation and enhance competition in the payments market.

On the other hand, PayPal warned in its submission that when deciding on its draft decision, the ACCC should consider the definition of "mobile wallet", arguing the phrase used in the application put forward by the banks was "overly broad particularly in the context of our industry which is dynamic and constantly changing".

"If the Commission determines to grant relief in the nature requested in the Application, such measures should be carefully tailored," it said.

Previously, Apple had 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.

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