Australia Considers Case for Opening iPhone NFC Chip to Third Party Payment Systems

[MacRumors]

Apple on Monday responded to questions from Australia's parliament about its third-party access approach to the NFC chip in its iPhones, following claims that its Apple Pay system is stifling innovation in the contactless payment technology space.

The Parliamentary Joint Committee on Corporations and Financial Services heard for-and-against arguments from Apple, Google, and others relating to whether Apple should open up access to its near-field communication (NFC) chip. Australia's big banks have also sought open access to the NFC chip on the iPhone in recent years. However, in a written response to the committee, Apple said it "provides banks with access to NFC functionality on Apple devices" through Apple Pay, which is "available to all banks in Australia on fair and non-discriminatory terms."

Apple has developed a technical architecture that comprises hardware and software components and application programming interfaces (APIs) that banks can use to facilitate contactless payments with their cards and mobile banking applications.

Apple chose to call this architecture Apple Pay because: (a) merchants need a simple way to communicate their acceptance of the service to consumers both in store and online, (b) Apple wished to facilitate consumer choice of payment method / bank by providing a consistent and simple experience, and (c) it allowed Apple to market the service to consumers without having to preference one bank over another.

According to ZDNet, Apple cited security as one of the reasons it doesn't support alternatives to Apple Pay, comparing it to Google's HCE payment system which it claimed is an inherently less secure system with a worse user experience.

Host Card Emulation (HCE) is a less secure implementation, which was adopted by Android … Apple did not implement HCE because doing so would lead to less security on Apple devices. Google likely selected this implementation because Android software is used in a variety of hardware devices offered from many different companies other than Google, and therefore had to select a software-centric solution, even though it is less secure than a secure element-based implementation.

Apple, which offers a tight integration between the operating system and its own hardware, is able to offer a fully integrated solution that is superior to Android's approach.

In response, Google denied the allegation that it had made a security trade-off in implementing the HCE system.

"Our payments apps are immensely secure … our HCE system, which is used by a very large number of banks all around the world, is audited directly by the banks … we would refute the suggestion our HCE environment is in any way insecure," Google president of partnerships in the EMEA region Diana Layfield told the committee on Monday afternoon. "I would argue the user experience on Google Pay is equal to that of Apple Pay."

The Australian parliamentary committee is still considering the arguments submitted. Elsewhere, the EU is currently considering forcing Apple to open up its NFC payment technology, and earlier this year, Germany passed anti-money laundering legislation that requires Apple to grant payment service providers access to its technical infrastructure.

Article Link: Australia Considers Case for Opening iPhone NFC Chip to Third Party Payment Systems

 

[ruka.snow]

Not fond of having the NFC chip compromised by any government or third party.

 

[boak]

I find it interesting that countries want to force companies to open up hardware to third-parties.

Are app developers going to demand that Apple allow them to use the entire RAM next? Not sure if that's comparable but happy to be enlightened.

 

[Porco]

As with a lot of this stuff, if Apple were the only smartphone makers I would completely support the involvement of government and/or lawsuits to allow for fair competition. But they’re not, alternatives exist elsewhere and people buy iPhones understanding the choices and consequences (some good, some bad, mostly subjective). That is competition and choice.

 

[bgraham]

Not fond of having the NFC chip compromised by any government or third party.

Hardly compromised - if Apple still has control to stop abuse and security issues, but is forced to allow competing services, everyone wins.

 

[bgraham]

Apple has developed a technical architecture that comprises hardware and software components and application programming interfaces (APIs) that banks can use to facilitate contactless payments with their cards and mobile banking applications.

And collect a fee with every transaction. Funny how they miss mentioning that.

 

[alecgold]

Funny thing in Australia. I always get the idea that the banks in Australia don't want to innovate, just earn lots of money and keep every form of innovation/competition out.
Here in The Netherlands we have 3 big banks but we have such a lean payment system (iDeal) that Apple Pay is a more expensive and less innovative in several ways.
iDeal works between banks, works instantly, also works between private persons and costs € 0.06 per payment at most, even if you buy a new car, the cost is still 0.06 or less.

 

[alba_83]

This makes no sense to me; and I certainly have no sympathy for the banks.

In Australia, we have extremely widespread adoption of NFC/contactless payments. You can literally find yourself in shops that don’t take cash at this stage.

Some of the larger banks like NAB held out on using Apple Pay and now it seems they’re crying foul because it turns out it’s a wildly popular payment method and their own implementations are ridiculous (an NFC ring, anyone? I kid you not).

 

[Neilo]

It took years before the big four Australian banks and Apple could come to an agreement over Apple Pay. Although it’s been up and running for maybe a couple of years now, Apple users in Australia were years behind with the functionality enjoyed by Android users and in many other countries. If these actions lead to a further relaxation over NFC usage and the ability to use Myki mass transit cards with Apple, then it will be a good thing. At the moment, and for several years, Android users have been able to use an electronic Myki card on their phone for trains and trams. iOS users are still waiting for this functionality, with currently no rumours that it will ever be available.

 

[Porco]

And collect a fee with every transaction. Funny how they miss mentioning that.

Hah, yeah, I did think … ‘…and are you gonna mention point d) (for Dollars?!), Apple?!’

 

[nikaru]

It took years before the big four Australian banks and Apple could come to an agreement over Apple Pay. Although it’s been up and running for maybe a couple of years now, Apple users in Australia were years behind with the functionality enjoyed by Android users and in many other countries. If these actions lead to a further relaxation over NFC usage and the ability to use Myki mass transit cards with Apple, then it will be a good thing. At the moment, and for several years, Android users have been able to use an electronic Myki card on their phone for trains and trams. iOS users are still waiting for this functionality, with currently no rumours that it will ever be available.

Probably there is a cartel between banks in Australia, because I don't believe that out dozens or even hundred of banks and card issuers, not a single one is able to reach an agreement with Apple over Apple Pay implementation.

The Australian parliament should investigate that, instead of imposing anything on Apple IMO.

 

[Mac4Mat]

If some of these ill informed governments carry on, it will stifle innovation and I don't say that in defence of Apple, but innovation in general.

When a company spends millions/billions developing products, and mindful of security, many customers use that as an indicator reason for their purchase.

If we take everything Apple away from Apple, then where is the motivation for development, for security, etc.

I do wonder sometimes if these government paper pushers have another agenda altogether, i.e. in making technology less secure and less private, to enable more and more intrusion into everyone's lives.

Consumers CHOOSE what to buy, and they know what they are buying. I don't want some government no name fighting a corner in my name, when its not what I want, and not what many customers want.

Now when it comes to taxation, that's a different story....don't let any of the IT behemoths get away with paying negligible taxes, but leave them to develop their products, when governments can in many cases even get a decent computer system up and running in their own governments!

 

[unsynaps]

You know. I always have to look at this stuff in a particular way that makes me go WTF.

You release a product. It's a superior product. Other people try to make same product, but their version is anything from crap to not good enough. They go out of business. Superior product remains unchallenged because they are well a superior product, and no one can seem to make one better.

Monopoly because of their own success. Just sounds stupid to me.

 

[unsynaps]

Now when it comes to taxation, that's a different story....don't let any of the IT behemoths get away with paying negligible taxes, but leave them to develop their products, when governments can in many cases even get a decent computer system up and running in their own governments!

Exactly. Taxes are the governments business not innovation.

 

[jicon]

Not fond of having the NFC chip compromised by any government or third party.

It’s NFC, and apps use it already outside of payment use for writing and reading NFC tags.

in terms of payments, banks are likely just after some middle ground to lower transaction costs.

 

[unsynaps]

It took years before the big four Australian banks and Apple could come to an agreement over Apple Pay. Although it’s been up and running for maybe a couple of years now, Apple users in Australia were years behind with the functionality enjoyed by Android users and in many other countries. If these actions lead to a further relaxation over NFC usage and the ability to use Myki mass transit cards with Apple, then it will be a good thing. At the moment, and for several years, Android users have been able to use an electronic Myki card on their phone for trains and trams. iOS users are still waiting for this functionality, with currently no rumors that it will ever be available.

Then let them use Android.

 

[oldmacs]

I'd love if I could for example have my Opal card on my iPhone to tap on/off buses and trains. I can use Apple Pay for it, but then you don't get the benefits of a Opal card

 

[oldmacs]

Then let them use Android.

Why should iOS users be at a disadvantage?

 

[MrFootery]

It’s NFC, and apps use it already outside of payment use for writing and reading NFC tags.

in terms of payments, banks are likely just after some middle ground to lower transaction costs.

Banks do not want to lower transaction costs; they impose them to generate profits.

Revolut had free transactions in my country until recently, when they introduced fees/charges to the already installed user base.

 

[boak]

If they succeed in compelling Apple to open up the NFC chip, the U1 chip will be up next.

 

[Deguello]

You know. I always have to look at this stuff in a particular way that makes me go WTF.

You release a product. It's a superior product. Other people try to make same product, but their version is anything from crap to not good enough. They go out of business. Superior product remains unchallenged because they are well a superior product, and no one can seem to make one better.

Monopoly because of their own success. Just sounds stupid to me.

There’s a difference between a superior product — Apple Pay in this instance — and a product which allows no competitors so consumers can decide if something is a superior product — Apple Pay in this instance.

Remember lo those many years ago when the government went after MS for monopolistic practices regarding Internet Explorer even though it was quite easy to download and use another browser?

 

[techfirth]

The question is, why do regulators have this power? I bought a device knowing full well what it could/couldn’t do.

I’d be angry if Apple made OTA changes to my device which changed it in ways I dislike. I’d complain, and if enough people did the same it would no doubt result in Apple restoring the former functionality.

If a regulator forces Apple to make my device less secure, less intuitive or just irritating to use because various apps are constantly asking me to use their NFC implementation instead of Apple Pay, who do I complain to? Regulators don’t own my device, they didn’t create the iPhone and they don’t deserve a say in how it works just because it’s ‘too successful’.

 

[ian87w]

I'm not sure why they have to force Apple to open up. Wouldn't it be a competitive advantage of another platform with complete access to the NFC then, ie they will be the "better" one vs Apple Pay?

If these government actually understand competition, let Apple be as closed as they want to be. Let the market decide. Unlike Windows, iOS is not even majority of marketshare.

 

[steve62388]

Ignoring for a moment the banks and Apple trying to protect their own turf. As a consumer if the NFC is opened up what benefits do I get?

I have seen a few people mention transit cards. But it would seem this is already possible with the status quo because lots of transit cards are already available.

 

[Deguello]

The question is, why do regulators have this power? I bought a device knowing full well what it could/couldn’t do.

I’d be angry if Apple made OTA changes to my device which changed it in ways I dislike. I’d complain, and if enough people did the same it would no doubt result in Apple restoring the former functionality.

If a regulator forces Apple to make my device less secure, less intuitive or just irritating to use because various apps are constantly asking me to use their NFC implementation instead of Apple Pay, who do I complain to? Regulators don’t own my device, they didn’t create the iPhone and they don’t deserve a say in how it works just because it’s ‘too successful’.

No one is saying you’d be forced to use another provider.

You’d complain to the makers of the apps that are irritating you.

Regulators didn’t create Windows or Internet Explorer, either.

i must say, though, it’s very encouraging to see so many people wanting less intrusive government. I’m hopeful it’s not just a question of whose ox is fired, though.