Apple Pay gains favor from the Australian regulator; mobile payment in the country expected to record a CAGR of 21.5% during 2017-2021

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Apple Pay was launched in Australia in early 2016 in partnership with American Express. ANZ and many other small banks have offered their support to Apple Pay. However, the country’s leading banks – Commonwealth Bank, Westpac, National Australia Bank, and Bendigo & Adelaide Bank have been involved in a battle with Apple, refusing to accept Apple Pay. In November 2016, the banks have sought intervention of the government and sought permission from the Australian Competition and Consumer Commission (ACCC) to commence boycott activities against launching Apple Pay.

The consortium of banks opposing the launch of Apple Pay in Australia were of the view that Apple Pay will utilize the NFC infrastructure created by the Australian banks and merchants and in turn refuses to provide them independent access to the NFC functionality on iOS devices. This means that Apple Pay will have exclusive access to the Australia’s NFC infrastructure for building mobile payments technology using iOS devices. To this, Apple Pay responded that the banks are hampering competition and also restricting security measures of customers by requesting access to NFC infrastructure on iOS devices. Below is a summary of key events:

• Later in December 2016, ACCC has issued a draft determination in favor of Apple. The regulator stated that the banks are allowed to offer other competitors such as digital/mobile wallets on iOS devices through their own apps by utilizing Apple Pay or NFC functionality, without the need of direct access for Apple’s NFC.
• Later in February 2017, ING Direct and Macquarie have announced their support for Apple Pay in Australia allowing their customers to use Apple Pay for making purchases at participating stores across the country. In the same month, the consortium of banks including Commonwealth Bank, Westpac, National Australia Bank, and Bendigo & Adelaide Bank have, in their further application to the ACCC announced that it will limit focus to procuring access to Apple Pay’s contactless payment function.
• In March 2017, the ACCC, in its final decision on the application announced that the collective bargaining of banks to boycott Apple Pay will, in most likely case distort competition. The ACCC chairman Rod Sims said, "The ACC is not satisfied, on balance, that the likely benefits from the proposed conduct outweigh the likely detriments".

According to PayNXT360’s latest report, mobile payment market is expected to record a CAGR of 21.5% from 2017-2021 to reach US$ 1,41,459 million in transaction value terms by 2021, increasing from US$ 64,972 million in 2017. In 2016, the market registered a growth rate of 29.3% over 2015, to reach US$ 51,090 million.

To know more and gain deeper understanding of mobile payment industry in Australia, click here.