back to article Australian Banks ask permission to form anti-Apple cartel

You can't make it up: the last industry in Australia to enjoy the privileged status of “protected and guaranteed by government”, the banks, want the country's competition regulator to rubber-stamp it acting as a cartel against Apple. Apple won't let Australia's banks use iPhones for contactless payments without using Apple Pay …

  1. Andy Mac

    Life's hard choices

    Screw the banks or screw Apple...

    1. SL1979

      Re: Life's hard choices

      Well, on this one, I'd have to go with "screw the banks". Opening up access to Apple's NFC, is also opening up the chip to not only the banks, but potentially anyone ELSE who obtains the technical specs for Apple's NFC technology, and has rudimentary coding experience. I'm not one for lobbying for any proprietary technology per se, but in this case, were Apple forced to open up access to their chips, it could feasibly be opening a huge can of worms with a label on it that reads "iPhone NFC Payment Exploit Kit". Meanwhile, millions of iPhone users could suddenly wake up one day to a bank account with a big fat balance of ZERO. Yeah. Perhaps if the day ever comes when security and encryption have become unbreakable, bulletproof things, this idea might be a good one. But we're not there yet. Not by a long shot.

      1. Chairo

        Re: Life's hard choices

        "were Apple forced to open up access to their chips, it could feasibly be opening a huge can of worms with a label on it that reads "iPhone NFC Payment Exploit Kit""

        Huh? Why should they grant chip level access to the NFC hardware? All that is needed is API access, based on NDEF standard, for example. There are valid reasons to not support the banks on this, but technology isn't one of them.

        1. Francis Boyle

          Re: Life's hard choices

          "Huh? Why should they grant chip level access to the NFC hardware? All that is needed is API access, based on NDEF standard, for example. There are valid reasons to not support the banks on this, but technology isn't one of them."

          Seconded. If Apple are unable to provide secure access to authorised services their system doesn't deserved to be trusted.

          I think I'll go for the banks here as the Hillary option.

      2. Sitaram Chamarty

        Re: Life's hard choices

        Speaking for myself, I don't see anything wrong with millions of Apple users waking up to a zero bank balance... they're used to Apple robbing them blind anyway so this can only be a minor incremental pain.

      3. Black Betty

        Re: Life's hard choices

        So, security by obscurity.

  2. Youngone Silver badge

    The more things change

    There are upsides to having a banking cartel though. New Zealand's big four banks are owned by the Aussie's big four, so we're in the same boat.

    While taxpayers the world over were shelling out their hard-earned to bail out their local banks when their profits dipped briefly in 2008, our governments found it too hard to sell the idea to us, (with a straight face), so we didn't have to bail our lot out.

    Of course we do have to pay eye-watering fees etc, so it's not all beer and skittles.

    1. GrumpyOldBloke

      Re: The more things change

      Bail-in legislation was agreed at the G20 summit in Brisbane. All signed up to reward the banks for their lack of financial acumen and to protect their bond holders from same, including NZ. You may have dodged a bullet in 2008 but rest assured the banks are now better prepared.

  3. WatAWorld

    "Under normal circumstances, if they formed a cartel-against-Cupertino, the banks would take a battering from the competition regulator, so they've asked permission to negotiate as a group."

    Cartels are generally illegal when they are for monopolies.

    Other cartels are, when openly formed, like those for hardware standards, or to bid on defense contracts, are legal.

    This cartel is fighting to break-up Apple's monopoly. So the competition regulator should be pleased.

    1. Anonymous Coward
      Anonymous Coward

      Apple has no monopoly

      They sell a minority of phones in Australia. Just because they require their own payment solution on their phone doesn't make them a monopoly.

      The economic definition of a monopoly is where a single company or cartel owns all or nearly all of the market for a single product or service. You can't define a market to be a single company's product and ignore all the competing products that clearly exist and are purchased by a majority of consumers just to claim that single company has a monopoly.

      If the iPhone did not exist, and Android had all the share that iPhone has now, Android would be considered a monopoly and subject to scrutiny under such laws. (The EU apparently has lower thresholds for what is considered a monopoly, and may potentially consider Android a monopoly even with Apple's presence in the market)

      This sounds like a trojan horse - I'll address that in a separate post.

    2. Teiwaz

      "Other cartels are, when openly formed, like those for hardware standards"

      - We don't have nearly enough of those...Apples idea of standards is something you get when you 'buy into' apple. No guarantee it won't be altered at their whim. The Banks clearly aren't happy with apple as the gatekeeper for this technology considering 35-40% of their customers are using it (possibly higher when you factor in the slightly higher disposable income of many apple users).

      1. Anonymous Coward
        Anonymous Coward

        Apple Pay uses the EMV standard, which is the same standard all the chip cards use in the US (and will use in Europe eventually if they don't already - the 'E' stands for Europay)

  4. Anonymous Coward
    Anonymous Coward

    This is a trojan horse

    The banks are using Apple as an excuse to create a cartel and force all smartphone users to use their payment system. They don't like Apple (or Android, but have less of an excuse to complain about them) sticking their nose into payments, and want to maintain their iron grip.

    If Australia allows this cartel, the banks will set the price and terms for mobile payments, and could set security requirements that only they would be capable of meeting, giving them an effective monopoly. Since it would be government sanctioned, it would be pretty much impossible to ever get rid of.

    Unless someone thinks the 35-40% of the smartphone market Apple owns in Australia is a "monopoly", they don't have a monopoly and the banks deserve no special consideration from the government. To the extent anyone considers what Apple is doing today a problem, the cure proposed by the banks is definitely worse than the disease!

  5. Teiwaz

    It's either one large special interest group or another.

    You could argue Apple is trojan horsing here. 35-40% is enough to snowball through a certain amount of ubiquity for apple pay, as there already is for itunes.

    1. Anonymous Coward
      Anonymous Coward

      Re: It's either one large special interest group or another.

      Apple Pay doesn't require any special support from the retailer, it uses the EMV standard that all contactless payments will in the future. So even if iPhones doubled their market share to 70-80% it wouldn't affect Android users - or the far far larger share of people who have no interest in ever buying stuff with their phone at all.

      1. Anonymous Coward
        Anonymous Coward

        Aaaactually...

        It depends on how the retailer's POS system works. If all the POS system expects is the PIN pad to turn around and say "Ok!" (if they even have an integrated POS system and not just a separate, standalone PIN pad into which they key an amount manually), then sure, it's a software switch to be flicked at the payment processor who owns/maintains the pinpad (in Australia, it's gonna be controlled/owned by a bank, Tyro or PaymentExpress generally speaking, and leased to the store).

        If, however, you're talking about a large, long term business in retail, then chances are that their backend systems have all sorts of complexities around supported card types, authorisation/accounting/reconciliation of those card types, and how refunds are handled... they might need significant work to support tokenisation when matching transactions from the bank the next day, or when needing to refund someone months down the track etc.. This is especially true for businesses that went from reading magstripes on keyboard attachments etc. to needing to integrate PIN pads which did the auth direct to the bank themselves and only return partial details (which is more secure, but not how the POS systems were designed).

        Either way, at least this article explains why only AMEX has Apple Pay in Australia :)

        1. Anonymous Coward
          Anonymous Coward

          Re: Aaaactually...

          A POS system that accepts EMV compliant contactless payments MUST accept Apple Pay and Android Pay - it can't tell the difference since the communication with the card is the same as the communication with the phone. The only difference is that Apple is providing less info - the merchant doesn't get your name like it does from the card (and retains less info, it isn't data mining your purchases like Google is with Android Pay)

          You can be compliant with EMV without supporting contactless payments (i.e. you have to insert the chip end of the card) which is what most of the readers around here seem to do, though I haven't really looked at them closely to see if some support NFC and would allow me to just get the card close. So you're right that EMV compliance doesn't imply support for Apple Pay. I assume there's some sort of NFC logo on the readers that support contactless versus require inserting the card, I just haven't bothered to look.

  6. Anonymous Coward
    Anonymous Coward

    I don't trust any of them

    Contactless or not.

    Use the Banks money for credit as it suits you

    Pay your bills with cash

    Insist on, and keep your receipts

  7. Dan 55 Silver badge

    So, banks that aren't ANZ want to screw ANZ

    Did I understand that right?

    What's preventing the rest rolling out Apple Pay?

    If they think Apple's going to change the Apple Pay's architecture that was a key part of the negotiations they've had worldwide with other banks just to please a handful of Australian banks, they're going to be sadly disappointed.

  8. MrDamage Silver badge

    Instead of a "limited boycott"

    Why don't they just add an x% surcharge onto all transactions conducted with ApplePay, where x% equals the exact percentage that Apple takes as its cut.

    That way, market forces will determine whether Apple has to play ball with the banks, or whether the banks have to suck it up and play by Apple's rules.

  9. Richard Cranium

    what I don't understand is...

    "As well as negotiating as a bloc, the banks want permission to conduct a *limited boycott* of Apple's payment system while negotiations continue."

    Why do they need permission to decide not to adopt Apple payment? Is someone forcing them to take Apple contactless? If I recall correctly there was a rumour that Apple didn't allow some banks in UK (HSBC) to launch Apple contactless in the first wave (because they'd jumped the gun over Apple with an announcement??). Surely the opposite option is available - i.e. for the Banks to choose not to accept ApplePay.

    As Apple mobile phones only represent about 15% of the global market why bother? Surely the banks best option is to declare that they accept contactless payments that use an open standard and leave it to the phone/app suppliers to decide whether they want to be part of that. A small player with 15% of the market doesn't want to join in? Their loss.

    Do many people use mobile-contactless? I occasionally used contactless _card_ but don't see the point in increasing the value of my phone to a pickpocket by giving the thief access to my bank account too.

    1. Dan 55 Silver badge

      Re: what I don't understand is...

      It seems one of the Australian banks, ANZ, already takes Apple Pay. The rest have decided that they should not use Apple Pay, instead they should be able write shitty banking apps which use the NFC chip and stop ANZ using Apple Pay until they get their way with Apple.

    2. Tim99 Silver badge
      Gimp

      Re: what I don't understand is...

      @Richard Cranium

      As Apple mobile phones only represent about 15% of the global market why bother?

      Perhaps because it is generally suggested that iFondle owners may have bigger disposable incomes?

  10. pingudownunder

    The big banks are protecting their EFTPOS baby

    Richard,

    One of the Big 4 banks in Australia, ANZ, already supports Apple Pay, and has done for a while. Your article mentions the other three who don't. Can't remember if Adelaide/Bendigo is owned by NAB, Westpac or not, losing track of their slurps.

    I suspect the real driver is the proprietary EFTPOS system built, and owned, by the Big 4. As it doesn't use EMV (it's still on magstripes and I'd say similar to Switch in the UK), of course it's AU only and I'd imagine a nice source of direct and indirect revenue. Apple are quite right not to support it.

    ANZ going to Apple and Google Pay has annoyed the other Big 3 banks.

    I'd say this is about the Big Banks getting all pisssed off at the industry not "recognising" or "thanking" then for being protectionist, profiteering, lazy and a bunch of sour grapes. They took the same behaviour when attacking the business model of the Credit Unions (e.g. locking them out eftpos, or persuading retailers to disallow using the Credit button when paying using a Visa Debit card because it bypasses the eftpos network, increasing per-transaction costs to non-eftpos banks). They also try attacking the smaller Tier 2 banks who customers churn to them for much better service, but it's easier to just buy them out and plunder.

    S

  11. Tim99 Silver badge
    Big Brother

    Tracking, Advertising and Selling Information

    It wouldn't have anything to do with the banks and their retailers wanting full access to the information then? Apples statement on their website:-

    "Every time you hand over your credit or debit card to pay, your card number and identity are visible, and swiping your card triggers an exchange of information. With Apple Pay, instead of using your actual credit and debit card numbers when you add your card, a unique Device Account Number is assigned, encrypted and securely stored in the Secure Element, a dedicated chip in iPhone, iPad and Apple Watch. When you make a purchase, the Device Account Number, along with a transaction-specific dynamic security code, is used to process your payment. So your actual credit and debit card numbers are never shared by Apple with merchants or transmitted with payment. And unlike credit cards, on iPhone and iPad every payment requires Touch ID or a passcode, and Apple Watch must be unlocked — so only you can make payments from your device."

    It might be a bit difficult for them to form a cartel as the ANZ Bank has already signed up...

  12. Anonymous Coward
    Anonymous Coward

    its all about the money

    It says in the article that the banks want a bigger slice of the transaction charge, the gready f@$ks just after more of your money, for no effort them selves, just watch the money will change hands and it will all go away

  13. wayward4now
    Mushroom

    Excellent notion!! Otherwise other bank users are going to share the overhead for the Apple transfers for Apple Users, and as I happen to LOATH Apple, I would be mightily pissed. The reason I happen to LOATH Apple is because they tried to sue me for using the word "Apple" in our user group name. Petty bastards.

  14. aberglas

    Apple is outrageous

    Using their App jail to lock out competitors. Totally unscrupulous, and exactly the type of vertical monopolizing that we do not want to see. It would be like the big for banks only accepting their own credit cards at eftpos terminals, forcing a monopoly.

    For this one I am in with the banks. And I am surprised that they have not been able to take on Apple directly over this.

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