Apple accuses Aussie banks of free-riding, deliberate delays

Apple has accused Australia's big banks of attempting to freeload off the back of its investment into Apple Pay, and trying to deliberately delay the growth of the payment platform in the country.

In an ongoing spat over the fees and conditions of use with Apple Pay, the technology giant has applauded the ACCC for its draft decision to refuse to allow Westpac, NAB, CBA, and Bendigo and Adelaide Bank to form a cartel in order to bargain with and boycott Apple on Apple Pay.

The group want to push Apple for access to its near-field communication (NFC) chips in its iPhones, and to drop its restriction on passing on Apple Pay fees to customers.

But the ACCC in November said it wasn't satisfied that the benefits of the effort outweighed the likely detriments to competition. It will make a final decision in March.

ANZ Bank is the only major bank to currently offer its customers Apple Pay. The service is also available to American Express customers and Cuscal's 31 financial institution partners.

In its latest submission to the ACCC's inquiry, published last week, Apple argued the banks were using the NFC argument as a smokescreen to try and avoid being lumped with the fees associated with Apple Pay.

Apple requires banks to give it a cut of the interchange fees associated with Apple Pay.

In the US, issuers must pay 0.15 percent of a credit card transaction and 0.5 cents for each debit card transaction, and 7 cents to Visa and 50 cents to MasterCard for each card that is added to an Apple wallet.

But Apple doesn't allow banks to recoup these fees from their customers. The Australian banks want to be able to pressure Apple to let them pass on the costs to their users.

"Apple's view is that this application is ... fundamentally about the applicant banks avoiding paying Apple fees for use of Apple Pay .. or specifically charging their cardholders for that use to discourage consumer use of Apple Pay and thereby reduce competition with their own proprietary wallets," it wrote.

It argued there was no difference in customer experience between a bank utilising the embedded NFC chip compared to a bank linking its own digital wallet with Apple Pay.

"The only benefit ... is a purely private benefit where they would be allowed to free-ride on the significant investments made by Apple ... to facilitate NFC payments without paying any fees for transactions processed via Apple's secure element infrastructure."

Apple claimed the banks were using the ACCC process to delay the expansion of Apple Pay in Australia to the 70 percent of cardholders controlled by the applicant banks, and had made "little to no attempt" to understand how Apple Pay works and how it can be utilised by their own mobile apps.

"The applicant's refusal to engage with Apple during the authorisation process provides evidence of the chilling effect of the proposed collective conduct on the benefits of competition..." it said.

The banks are yet to respond - they asked the ACCC for an extension until today to make their case against the regulator's draft decision.

Update: In a statement the banks denied they were attempting to limit the use of Apple Pay locally.

'“[This] has always been about providing real choice and real competition for consumers and facilitating innovation and investment in the digital wallet functionality available to Australians," they said.

"Apple's statement that the application is fundamentally about an objection to the fees that Apple wish to be given rather than NFC access, is incorrect and unsupported."