The Commonwealth Bank of Australia, Westpac Banking Corporation, National Australia Bank, and Bendigo and Adelaide Bank had asked for authorisation to jointly bargain with Apple over access to the near-field communication (NFC) controller in iPhones, and over access terms to Apple's App Store. The banks want to offer their own 'digital wallet' to iPhone customers, in competition with Apple's digital wallet and without using Apple Pay.
NFC uses radio waves to transmit data between devices and allows contactless payments to be made, while a digital wallet is an app that manages these payments.
"The ACCC is not satisfied, on balance, that the likely benefits from the proposed conduct outweigh the likely detriments. We are concerned that the proposed conduct is likely to reduce or distort competition in a number of markets," the ACCC said.
"While the ACCC accepts that the opportunity for the banks to collectively negotiate and boycott would place them in a better bargaining position with Apple, the benefits would be outweighed by detriments," it said.
The banks had argued that providing their own digital wallets would increase competition and consumer choice in digital wallets and mobile payments in Australia, and increase innovation and investment in the technology. It would also increase consumer confidence, leading to greater use of mobile payments, they said.
The ACCC accepted that giving access to the NFC controller is likely to lead to increased competition, and that this was a significant public benefit, it said. However, it would also cause significant distortions to and reductions in competition, it said.
"First, Apple and Android compete for consumers providing distinct business models. If the applicants are successful in obtaining NFC access, this would affect Apple’s current integrated hardware-software strategy for mobile payments and operating systems more generally, thereby impacting how Apple competes with Google,” the ACCC said.
"Second, digital wallets and mobile payments are in their infancy and subject to rapid change. In Australia, consumers are used to making tap and go payments with payment cards, which provide a very quick and convenient way to pay. There is also a range of alternative devices being released that allow mobile payments; for example, using a smartwatch or fitness device. It is therefore uncertain how competition may develop," it said.
Giving the banks access to the NFC could also artificially direct the development of emerging markets to the use of the NFC controller in smartphones, and hamper innovation that is currently occurring, it said.
"Finally, Apple Wallet and other multi-issuer digital wallets could increase competition between the banks by making it easier for consumers to switch between card providers and limiting any ‘lock in’ effect bank digital wallets may cause," the ACCC said.
The banks said that they are disappointed by the decision, and that they will "individually review and determine their future strategy for mobile wallets and mobile payments in order to best serve their customers".
"Mobile wallets are currently overwhelmingly focussed on mobile payments, but will soon take in loyalty programs, mass transit ticketing, access, identity and a great number of other future innovations. Ultimately there is no technical barrier standing in the way of our entire physical wallet becoming digital. Apple has a stated desire to own the entire mobile wallet, and will use the beachhead into mobile wallets afforded to them by complete control over mobile payments on iPhone to exert control over the rest of the digital wallet," the banks said.