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Limited Innovation in Mobile Wallets Technology

[The giant hope for trendies who want this so-called amazing technology seems to be faltering day by day. No agreement, no consensus. Another example of big business trying to impose itself on everyone whether we want it or not. Another example of big businesses trying to take over another big business and its own policy - right or wrong - so they can control what they don't own. I wonder if CCH has encountered this along the way....banks and others trying to control our business?!]

Retailers Join Banks in Apple Pay Dispute

Australia's retailers have joined the attack on Apple's global policy that prevents third-party payment applications from using the communications antenna on the iPhone, saying it will limit innovation in mobile payments and digital wallets.

The retail sector has backed three of Australia's big four banks in their dispute with the world's biggest company over getting their digital wallets onto iPhones.

Apple's own Apple Pay application is the only app that is able to use the iPhone's "near field communication" (NFC) chip, the technology that communicates with point-of-sale terminals to facilitate "tap and go" payments.

But retailers say that new mobile wallet services, apps that are being developed by banks and some large retailers, are unlikely to succeed unless they are available on all the major mobile phone platforms. Mobile wallets combine payment cards, loyalty cards, identification and public transport cards into an app on a device.

"In our view, for as long as Apple Pay remains the only app that can use the iPhone's NFC functionality, the potential for innovation in mobile wallets and mobile payments will be limited," said the Australian Retailers Association in a submission to the Australian Competition and Consumer Commission.

"With Apple's iOS or Google's Android installed on almost every smartphone sold today, a service only available on one of those platforms will struggle to succeed...

"We would like to see all customers have a choice of mobile wallets and payment services using the mobile phone they already have and the bank debit and credit cards and loyalty cards they already use."

The ARA is the peak industry body for the $300 billion retail sector in Australia, which employees more than 1.2 million people. Its submission follows an application made last month by Commonwealth Bank of Australia, Westpac Banking Corporation, National Australia Bank, and Bendigo and Adelaide Bank who have asked the ACCC whether they can negotiate as a block against Apple over access to the NFC antenna and to develop common security standards.

ACCC chairman Rod Sims said on Friday the regulator had an open mind on the issue and would have to balance anti-competitive conduct on both sides to work out what would be in the best interests of consumers. It will make a draft determination in October.

Apple said in a submission to the ACCC that providing banks with access to the phone's transmitter would compromise the security of Apple's hardware and the banks' application "is only the latest tactic employed by these competing banks to blunt Apple's entry into the Australian market".

In a separate submission, supermarket giant Coles, which will report through its parent Wesfarmers its full-year results on Wednesday, said it does not object to the banks' application to collectively negotiate with Apple on industry standards and guidelines in the design of security and other processes.

"It is important to recognise that the industry has collectively made very significant investment in payments technologies like NFC, with an open and inclusive approach aimed at continually improving the experience for all customers," Coles said.

The Australian Payments Clearing Association has also backed the banks' application, saying in a submission to the ACCC it anticipates increasing consumer demand for and adoption of mobile payment products in the next five years.

"APCA supports payments innovation and consumers being able to exercise choice in relation to payment services and products. In particular, we consider that access to payment platforms and competition on open platforms, are key enablers of innovation in payment services and products, and deliver tangible benefits to consumers and merchants. We consider that exclusivity and restrictions on access to platforms and functionality, by contrast, may tend to stifle innovation and competition."

The ARA submission, published by the ACCC on Tuesday, pointed to card issuers and consumer groups outside Australia raising concerns with Apple over access to the iPhone platform, calls that have fallen on deaf ears.

"We would hope that the ACCC's authorisation of this collective negotiation may add to this growing concern and encourage Apple to reconsider its position," ARA said.

"This is an important time in the development of mobile wallets and mobile payments. There is now an opportunity for rapid innovation and for new players, platforms and services to emerge in a quickly developing market.

"However, in order to realise these benefits, it is important that consumers and merchants have a choice between mobile wallets and mobile payment services whichever mobile device or platform they have chosen.