Apple has recommended no changes be made to Australia’s existing financial services regulatory framework, saying if there are to be any reforms, they should not undermine innovation or result in solutions that are less secure or less private for consumers.
“Apple believes that Australia’s existing regulatory framework is encouraging and fostering innovative developments that offer competition to incumbent banks, while minimising the risks that arise from developments in technology and broader structural changes to the economy driving new forms of payments,” Apple said in a submission [PDF] to the Parliamentary Joint Committee on Corporations and Financial Services.
“Apple believes policies or regulations that seek to prescribe or dictate a technical approach are unnecessary and create severe unintended consequences, including compromising the security of the payments systems and stifling innovation that benefits customers, banks, and the broader payments industry.”
The iPhone maker told the committee Apple Pay is an “example of the dynamic competition and innovation that characterises the payments markets globally and in Australia”.
The committee recently opened an inquiry into mobile payment and digital wallet financial services, with particular reference to the nature of commercial relationships and business models, including any imbalance in bargaining power operating between providers of mobile payment digital wallet services and financial services, merchants and vendors, and consumers.
Other submitters, including the Reserve Bank of Australia, the Australian Competition and Consumer Commission (ACCC), and the Commonwealth Bank of Australia (CBA) had previously raised concerns with the committee over the increasing “big tech” monopoly in the payments space, with CBA going as far as saying mobile device manufacturers act as a “gatekeeper”.
Apple said its only role has been to develop the technical architecture that can be used by licensed financial institutions to offer their consumers a “safer and more secure way to pay with their credit, debit, or prepaid cards”.
“Apple does not issue credit, debit or prepaid cards, and does not process, authorise or execute transactions. Apple is not a bank, financial institution or payment service provider,” Apple stated in its submission. “Rather, Apple has partnered with banks and other financial institutions to enable them to securely store payment credentials on Apple devices.”
Apple does, in fact, have its Apple Card, which is a credit card created by Apple and issued by Goldman Sachs, as well as iTunes gift cards, which the ACCC said were used in almost 430 reported scams for a value of AU$853,000,
Cupertino also said it does not restrict its partners from developing their own iOS apps, nor from supporting mobile payments or alternative presentment methods.
“Indeed, every major Australian bank has an iOS mobile banking app … banks in Australia are able to initiate an NFC payment or read data via NFC directly from their iOS apps, and/or to leverage alternative technologies for making mobile payments,” the submission added.
“In addition, Apple has enabled banks to initiate NFC payments directly from their iOS apps. This allows banks/card issuers to offer highly differentiated services and a good example of this is Afterpay’s iOS app.”
CBA, alongside Westpac, the National Australia Bank (NAB), and Bendigo and Adelaide Bank, had joined forces back in 2016 to go after Apple and its control over its own near-field communication (NFC) technology, annoyed that Apple did not allow any other entity direct access to its technology.
The group argued that access would enable them to offer their own integrated digital wallets to iPhone customers in competition with Apple’s digital wallet without using Apple Pay — something Apple wanted to avoid.
The banks lost that fight four years ago, with the ACCC handing down a determination denying authorisation.
Since then, the banks have caved and now offer their customers Apple Pay.
“The Apple Pay architecture is available to any card issuer that can meet the technical and commercial requirements for Apple Pay,” Apple said.
“Card issuers have equal access to this architecture: All card issuers pay the same fees and are subject to the same terms and conditions in their territory regardless of size and each card issuer is presented equally in the user experience.
“Apple’s focus has been on bringing innovation to payments while providing Apple technology on a non-discriminatory basis.”
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