The Commonwealth Bank of Australia has urged the government to propose new regulation that will impact Apple Pay and Apple Wallet—and Apple has responded in opposition.
Under the current legislation, the Reserve Bank of Australia (RBA) is prohibited from requesting data from tech firms. It also lacks the authorization to enforce rules tied to smartphone access or submit them to price regulation. However, new rules could extend its authority toward digital payment platforms.
Apple believes this could potentially compromise the security and privacy of iPhones. In a submission to Treasury acquired by The Australian Financial Review, Apple argues that this proposed legislation could suppress technological innovation, in addition to damaging its intellectual property rights.
The tech giant explained that its only role was to provide the “technical architecture” for licensed financial institutions to help customers securely pay with their cards.
Apple As a Partner, Not a Disruptor
Although the Commonwealth Bank of Australia may see things differently, Apple is not on a mission to be the ultimate disruptor and launch its own bank. As we’ve previously covered, such an endeavor is both costly and time-consuming. Instead, Apple is playing on the sidelines, posing no financial risk to banks.
Apple seeks partnerships with banks and other financial institutions so that consumers have access to more payment choices. Apple believes this will fuel competition—and it could be the reason that the Commonwealth Bank of Australia may be opposed to the matter.
If the regulations were to pass, both the Treasurer and the RBA would fall under a licensing regime, meaning that the central bank will interfere as to how Apple accesses its digital wallet. Apple maintains that there is no justification for this type of action.
“The current ‘wallet’ status quo is such that individuals who own Apple devices must use Apple Wallet to make payments using that device,” said Christopher Miller, Lead Analyst of Emerging Payments at Javelin Strategy & Research. “Currently Apple prohibits any other app from using the NFC chip that enables those payments. The proposed regulations appear to enable challenges to that policy, which would potentially expose the Wallet app to direct competition from other wallets in the Australian market.”
“While it is possible that such regulations could chip away at Apple Pay’s market share, it’s not a given that consumers would rush to adopt other options, particularly if Apple Wallet can remain the default option. Additionally, it’s not clear that POS payments will be competed as they currently exist. One path around NFC chip control is simply for retailers to encourage in-app purchases, allowing consumers to sidestep the in-store POS altogether. Bringing the payment experience in-app breaks down the differences between e-commerce and in-store purchases over time and may even challenge the importance of wallets themselves as payments options.”
