Australian Retailers Back Banks' Right to Negotiate With Apple

[MrX8503]

That statement by Apple just kills me - it's EXACTLY what Apple does each and every day in it's ecosystem.

I don't want to be in a bank's ecosystem nor be controlled by them. My experience with banks has been terrible. Right up there with cable companies.

Geez, you're making a simple damn purchase ... tap your credit card or use Apple Pay ... where's the UX ... you get a receipt from the merchant using either.

Contactless cards seem unsafe. I wouldn't want one. Maybe that's why there's a dollar limit on purchases without identification. The US is committing to chip cards, so contactless cards are uncommon. I'll stick with Apple Pay.

Apple Pay(and possibly Android Pay, haven't used it myself) is vastly superior to all other forms of digital payments. The only negative is that not all retailers support it.

 

[timber]

You aren't forced to have one type of card. My cards (and all I've seen) have magnetic stripe, chip and contactless.

When using contactless above a certain limit you are just asked for the PIN.

So digital payments with a phone can be an improvement but not something that earth shattering.

 

[KmanOz]

Geez, you're making a simple damn purchase ... tap your credit card or use Apple Pay ... where's the UX ... you get a receipt from the merchant using either.

I get an instant PUSH notification telling me what I just spent. Paper receipt is unnecessary unless for warranty purposes. In fact anytime the card gets used I get a PUSH notification. Very reassuring.

Where's the UX you say. Well ... I have 4 cards that I can flick through in no time using the UX. I DON'T NEED A WALLET. Clearly you haven't used Apple Pay, just your mouth and keyboard

 

[RedOrchestra]

I get an instant PUSH notification telling me what I just spent. Paper receipt is unnecessary unless for warranty purposes. In fact anytime the card gets used I get a PUSH notification. Very reassuring.

First I know what the amount is before I make the purchase and second, I get a ping and a check mark on Apple Pay to show the charge going through - how much more reassurance does one need - maybe credit / debit cards aren't meant for you, you seem a bit paranoid about technology as a whole ... perhaps cash would be a better option for you.

 

[tmiw]

I have a feeling that some MR posters won't be happy unless Apple's forced to pay the banks for every transaction. Even free/close to it wouldn't be enough.

First I know what the amount is before I make the purchase and second, I get a ping and a check mark on Apple Pay to show the charge going through - how much more reassurance does one need - maybe credit / debit cards aren't meant for you, you seem a bit paranoid about technology as a whole ... perhaps cash would be a better option for you.

I don't know about anyone else but the instant notification for all purchases is useful for being able to detect fraud and get the card shut down quickly. I don't have to look at my online banking nearly as often because of it.

 

[kdarling]

If my bank charged me extra to use Apple Pay, I would just move to another bank.

Probably most banks would charge extra if they were able to, same as they do with any other back end cost.

Unless... Apple dropped or sharply reduced their fee, which might be an end result that the banks would be okay with. It's no different than any other negotiation. One side starts high; the other low.

Personally I think Apple would've been smart to allow every bank to register their users with Apple Pay with no purchase fee, since worldwide bank support would be a feature which would help sell iPhones... which I think is more important in the long run.

Now that NFC exists and Apple is making use of it on their hardware and OS, I'm not sure I see a reasonable argument where Apple should be forced to release their innermost secrets of how all their hardware works, so that banks can develop their own apps to rival Apple Pay, while simultaneously putting Apple's security at risk.

There's no deep secrets to release. They're using a standardized NFC controller and secure element. It'd be like allowing apps to use WiFi or Bluetooth via an API.

Again, Apple doesn't have anything to do with the actual contactless transactions beyond verifying that a user's PIN or fingerprint matched what was stored.

The contactless payment systems that do the real secret work, from the Secure Element applets, through the NFC Controller emulating a card to the merchant terminal, and the back end systems handling tokens, authorizations and payments, were all coded by others.

For example, Visa would've provided their own proprietary payment applet for the Secure Element, which uses crypto methods only they know. Ditto for the other card networks. They all have their own secret data fields which overlay the standard EMV contactless NFC transaction format, which itself is public.

 

[MrX8503]

You aren't forced to have one type of card. My cards (and all I've seen) have magnetic stripe, chip and contactless.

When using contactless above a certain limit you are just asked for the PIN.

So digital payments with a phone can be an improvement but not something that earth shattering.

I would choose digital payments every time over contactless.

Probably most banks would charge extra if they were able to, same as they do with any other back end cost.

Unless... Apple dropped or sharply reduced their fee, which might be an end result that the banks would be okay with. It's no different than any other negotiation. One side starts high; the other low.

Apple hasn't agreed with any bank to lower or drop fees. Many banks have accepted the fees. Banks charging users to use Apple Pay is as bad as not supporting Apple Pay at all. The banks have to get their money from Apple, not the users.

Personally I think Apple would've been smart to allow every bank to register their users with Apple Pay with no purchase fee, since worldwide bank support would be a feature which would help sell iPhones... which I think is more important in the long run.

I think the way Apple did it was very smart. Setup is on the phone, not at a bank website. Apple wants to diversify their revenue stream and Apple Pay does that. There's no reason for them to remove the fee if it's been successful for them.

 

[@Brett]

I fully agree. Look at ANZ when they went with Apple Pay look how many new customers they had come over to their bank. The consumer I believe has spoken and stated they want Apple Pay. Also I do not want dozens of apps on my phone just so i can pay for things that is where I like the convienence of the Wallet in iOS which allows me to use my phone iPad or Apple Watch to pay. And as for Coles, really we back the banks because we want to roll out our own wallet app to lock people in but don't want to do the hard yards so will just back the greedy banks to do it.

 

[KmanOz]

I don't know about anyone else but the instant notification for all purchases is useful for being able to detect fraud and get the card shut down quickly.

You're absolutely correct. Don't worry about RedOrchestra's post.

 

[richarddib]

Apple wants to be a monopoly ... NOT GOOD!

 

[RedOrchestra]

NOPE ... Apple can't do anything for the banks BUT Japan iPhones are getting special treatment ... interesting

https://www.macrumors.com/2016/08/25/apple-iphone-sony-felica-chip/

 

[bowlen]

Apple Pay is just another wallet for your credit / debit cards - still going to need individual apps for the various banks you have accounts at - Apple Pay doesn't replace those.

Mate I don't think that's right...you import your CC into Apple Pay, then when you pay at a shop accepts Apple Pay...you just swipe your phone...there's no need for a bank app PURELY to use Apple Pay..

 

[Abazigal]

Build yourself something as secure as Apple Pay, then give it away for free. See how that works out for you.

Slow and steady wins the race for Apple. It's only a matter of time before more countries adopt Apple Pay, and every single transaction made makes Apple that little bit richer.

We have already seen what happened when Google have Android away for free. Tons of market share, but very little profit to show for it, and they now have practically zero control over their own platform.

But no, let's ignore what works and copy a model which clearly hasn't worked for the competition.

 

[kdarling]

Apple hasn't agreed with any bank to lower or drop fees. Many banks have accepted the fees.

On the contrary, Apple has lowered their fee several times already.

They had no choice, especially in the EU where some bank fees are capped at around 0.22%, and thus Apple's 0.15% demand as used in the USA was totally unsupportable. So Apple had to ask for a lower rate.

- Canadian banks then saw their opportunity and for a while held firm together, which, according to the Canadian Financial Times, allowed them to negotiate the US 0.15% rate down to 0.04% plus fifty cents annually per card. That's a HUGE drop.

- Australian banks now also see an opportunity, and they're sure going to negotiate Apple down as well.

- Insiders say that American banks are not happy with how Apple played them, and there'll likely be some hard negotiations when their initial three year contract is up.

Between the fees for doing nothing, Apple's branding over the banks', countries with EMV security already, and the relatively low spending on Apple Pay, banks have come to realize that Apple needs them more than they need Apple.

I think the way Apple did it was very smart. Setup is on the phone, not at a bank website.

That's not unique. Heck, when Apple Pay came out, its card registration process... and even the Apple Pay website... were near duplicates of Google Wallet.

However, think about it. Banks don't need to scan in your card, since they already know it.

Apple wants to diversify their revenue stream and Apple Pay does that.

I think you're absolutely right about that.

 

[timber]

I would choose digital payments every time over contactless.

Me too. I always prefer the best even if the best isn't that much better the the previous option.

 

[ErikGrim]

banks have come to realize that Apple needs them more than they need Apple.

Hahahahaha. No.

 

[kdarling]

Hahahahaha. No.

This is a forum. You can use big boy words here

If none of the banks in a country sign up, then they're left in the same position as before. Nothing lost.

It's Apple who needs at least one bank to sign on, to get a foothold in an area. Banks are wise to this now, and have tended to work together to get the best deal.

 

[ErikGrim]

Banks are wise to this now, and have tended to work together to get the best deal.

Which is collusion. Illegal in most countries.

 

[KmanOz]

Got my ANZ credit card today. Who cares what they do really.
[doublepost=1472474637][/doublepost]

It's Apple who needs at least one bank to sign on

And they did, and I joined. NEXT

 

[kdarling]

Which is collusion. Illegal in most countries.

You're right. It's interesting that the UK banks seemed to escape accusations of that even after getting a lower rate after a long refusal to sign up (possibly because they quoted privacy issues), whereas the public seemed to think it was more obvious with the Canadian banks, and now Australian banks are openly requesting to negotiate together.

Got my ANZ credit card today. Who cares what they do really.

Australians at other banks, even if you don't care.
--

In an ideal world, both the bank apps and Apple Pay would be supported, and the consumer could choose. Alas, just as with app and smartwatch APIs, Apple is always going to gimp competing products, say by not allowing an NFC app to automatically open. Likewise, the banks would want to charge more for Apple Pay users.

Greed on both sides hurts consumers.

 

[KmanOz]

Greed on both sides hurts consumers.

What you call greed on Apples behalf is only half the story. Tight control of the UX is the other half and to me at least it's the later that I worry about. I don't want iOS to be a dogs breakfast like Android. Neither does Apple thankfully.

 

[MrX8503]

On the contrary, Apple has lowered their fee several times already.

They had no choice, especially in the EU where some bank fees are capped at around 0.22%, and thus Apple's 0.15% demand as used in the USA was totally unsupportable. So Apple had to ask for a lower rate.

- Canadian banks then saw their opportunity and for a while held firm together, which, according to the Canadian Financial Times, allowed them to negotiate the US 0.15% rate down to 0.04% plus fifty cents annually per card. That's a HUGE drop.

- Australian banks now also see an opportunity, and they're sure going to negotiate Apple down as well.

Ok, but banks aren't charging users to use Apple Pay.

 

[8973918723969236591265]

Australian retail giant Coles, the Australian Payments Clearing Association (APCA), and the Australian Retailers Association have all expressed their support to allow some of the country's banks to collectively negotiate with Apple over access to its NFC-based digital payment technology (via ZDNEt).

Last month, Commonwealth Bank, National Australia Bank (NAB), and Westpac lodged a joint application with the Australian Competition & Consumer Commission (ACCC) to negotiate with Apple because they want to be able to use digital wallets they have already financed and developed, rather than be tied into using just Apple Pay.

Apple lambasted the banks over the application, and last week the request was denied by the ACCC to give the antitrust regulator more time to consult and consider the views of all the parties involved.

However, in a letter of support sent to the ACCC, retailer Coles argued that giving the banks the ability to negotiate with Apple will enhance the experience for customers, as well as improve the transparency of costs related to credit card processing fees.
The APCA also backed the banks, claiming enabling them to negotiate will encourage greater innovation and enhance competition in the payments markets, and ultimately deliver benefits to consumers and merchants.

"We consider that the exclusivity and restrictions on access to platforms and functionality, by contrast, may tend to stifle innovation and competition," it said.

Meanwhile, retail body ARA argued that if Apple allowed the banks to put their mobile banking apps onto the iPhone, it would give consumers the option to choose.

"We would like to see all customers have a choice of mobile wallets and payment services using the mobile phone they already have and the bank debit and credit cards and loyalty cards they already use," the ARA wrote.

PayPal also wrote to the ACCC, but rather than endorsing the banks' request for negotiations, it said the original application's definition of "mobile wallet" was too broad. The digital payments giant also wrote that the APCA's voluntary Third Party Digital Wallet Security Industry Guidelines should not be mandated without open discussions on standards.

Apple's opinion on the matter remained the same: the company believes the original application shows the banks want to maintain complete control over their customers and blunt Apple's entry into the Australian market.

Article Link: Australian Retailers Back Banks' Right to Negotiate With Apple