Why the Apple Pay case is not just another argument over technology

The Australian Financial Review (AFR) quotes Apple Pay boss Jennifer Bailey saying that CBA, NAB and Westpac risk missing the future of payments. That may be, but what about letting competition decide?!

In its submission to the Australian Competition and Consumer Commission (ACCC), Tyro argues that it is in the public interest to support the Australian banks in negotiating an open access to the Apple NFC antenna on the Apple iPhone. For that, the big banks need an ACCC authorisation to be able to collectively bargain with the bigger competitor, Apple.

Call it a case of strange bedfellows, yet Tyro agrees with the banks. What is at stake is transparency, innovation and competition being delivered to Australian consumers, especially in terms of businesses being able to choose mobile wallet solutions and the applications that they enable.

While Apple allows third parties to connect free of charge to its phone product range via Wi-Fi, 3G, Bluetooth and other network protocols, it does not do so for NFC.  Eliminating third party access to the Apple NFC function is particularly effective in stifling innovation and competition, because it is the only available and highly secure connectivity option that is ubiquitously available across the entire card payment infrastructure and terminal fleet.

Apple is using the world leading Australian EFTPOS terminal infrastructure with its NFC readers to support its Apple Pay solution, but bars Australian providers from accessing the NFC antenna of its smartphone fleet. That does not only eliminate third parties in the card payment space alone, but also those providing services with regards to transport, passports, driver licences, loyalty solutions and many other innovations not yet imagined. They will also require the wallet and NFC connectivity to the phone, yet they will face this access barrier and cost disadvantage too.

New ideas beyond the wallet model will be unable to leverage the NFC at all. For example, security systems such as car parks, building lifts and premises access where the tight proximity enables additional security from snooping/eavesdropping or a new payments scheme that does not use the conceptual form factor of cards with PANs. For example, PayPal with usernames and no interchange will not be possible.

In the AFR article, Apple said that “it is thinking about digitising everything in a physical wallet. This would include not only payment cards, but loyalty cards, transit cards and also, potentially, cards establishing identity.” That makes Apple’s strategy clear. There is so much at stake.

Apple is such a revered company that has provided such stunning user experience to our generation. Why does it need to stifle competition instead of trusting in its solution winning in the market space. Tyro believes in open banking. Let the best idea win. Come on Apple!