Apple has managed to stop banks from banding together to negotiate a better deal for Apple Pay, at least in Australia.
The banks did not want to agree to Apple’s outrageous transaction fees for its mobile banking service and instead wanted to band together to force Apple to agree to something cheaper create something that would not cost them so much.
Apple, of course said no, and complained to the regulator that the banks were ganging up on it.
Australia’s competition watchdog agreed and said that the banks could not work together to introducing their own mobile applications on iPhones and Apple Watches that could be used for contactless payments instead of the Apple Wallet.
Australian Competition and Consumer Commission Chairman (ACCC) Rod Sims said: “If others need to think it through … we’ve at least got something out there which they can kick off from.”
If the four Aussie banks won two-thirds of the nation’s credit card market, would have given them more negotiating power, and could have sparked similar appeals to regulators for access to Apple’s systems in other jurisdictions around the world.
This would have given Apple a huge headache as it has been running a divide and conquer system all over the world forcing each bank to negotiate for access to Apple gear individually. If it had to deal with the Aussie banks as a group they could have simply told it to go forth and multiply.
But the Australian watch dog was concerned that giving the banks bargaining power could reduce competition by forcing Apple to act more like Google which owns the more open Android operating system that allows contactless payments from individual apps.
An Apple spokeswoman said it was a great decision for Australians who wanted the “easiest, most secure and private payment experience possible with Apple Pay”.
It is now thought that Apple will extract a pound of flesh from the banks that dared to oppose it by making them pay more for not doing its bidding early. Although quite why the banks should even bother with Apple Pay is open to question.
An Australian watchdog has growled at three banks who want to open negotiations with the fruity cargo cult Apple to set up its “Apple Pay” system on their servers.
Australia’s antitrust regulator said it would not grant the country’s three biggest banks interim approval to collectively negotiate with Apple Inc to install their own electronic payments applications on iPhones.
Australia’s three biggest banks, including the number one lender National Australia Bank, asked permission to negotiate as a bloc from the Australian Competition and Consumer Commission (ACCC).
ACCC Chairman Rod Sims reckoned that the watchdog had not been given enough time to think about the move. It wants more time to consult and consider the views of industry, consumers, and other interested parties.
Part of the problem is that Jobs’ Mob does not allow third-party electronic payment apps to be loaded onto the iPhone. The banks are worried that they could be accused of violating anti-competition law.
Australia and New Zealand Bank, which signed a deal to use the Apple Pay system in April, is the only one of the country’s ‘Big Four’ banks not to join the action. The country’s second-biggest lender, Commonwealth Bank of Australia, and number three, Westpac Banking Corp, have joined with NAB.
While it was released with all the hype you would expect from an Apple product, Apple Pay is failing to interest people in the world.
After 18 months, Apple Pay has made a tiny dent in the global payments market, thanks to being stuffed up by technical challenges, low consumer take-up and resistance from banks who don’t see why they should support something that makes them sod all while making Apple rich.
The service is available in six countries and among a limited range of banks but it has failed to gain much traction outside the US. Apple Pay usage totalled $10.9 billion last year and that was mostly in the US. Although the figure looks high it is really sod all when you consider how much cash is moved around in mobile payments.
In China Alibaba and Tencent made an estimated $1 trillion worth of mobile transactions last year.
Basically Apple Pay is only popular with the hard-core Apple fanboys which we estimate total six million worldwide. These are the people who do what ever Apple tells them and would buy a dog poo if it had an Apple logo on it.
Other iPhone users are not bothering with the service. Apple Pay transactions were a fraction of the $84.5 billion in iPhone sales for the six months to March, which accounted for two-thirds of Apple’s total revenue.
It has not been helped by the fact that the hardware that Apple Pay uses has been as reliable as Jobs’ Mob’s Apple IIc’s. While the do not appear to be catching fire.
In Australia, where Apple Pay launched a month ago, payment machines supported by one mid-sized bank reported frequent failures.
Apple Vice President Jennifer Bailey said such experiences were premature and not representative. “Like any set of major technology changes, it takes time. We want to move as quickly as possible, we push it as quickly as possible.”
Apple is also finding that the banks are harder to roll over than the movie, music and book trade. Apple is used to telling its partners what to do, but the banks have long experience of telling politicians and businesses what they can do. Some country’s banks have even managed to negotiate lower transaction fees or have been holding out for Apple to offer something more reasonable.
Then there is the small matter that banks are starting to build their own products and don’t need Apple Pay at all. This situation is mirrored in the US where stores are starting to test their own services which will make Apple Pay redundant.
Apple announced its mobile payments system in the UK today and embarked on a blitz of advertising in a bid to announce its wares.
Apple hopes that people with iPhones and that rarer breed of people with Apple watches will use their devices to pay for tube tickets and cups of coffee. You have to tee up your gadget with a valid credit or debit cards.
The system has broad demand from most major UK banks and a number of merchants of products. It supports credit and debit cards from Visa, Mastercard, American Express, Natwest Santander and others.
Shops supporting Apple Pay include Boots, Marks & Spencer, McDonald’s, Starbacks, Subway and Waitrose.
There are also apps supporting the payment system from companies like Argos, Zara, Ocado and Miss Selfridge.
The Tame Apple Press dubbed 2015 as the year of “Apple Pay” when everyone would be using their Jobs’ Mob handsets to buy goods.
However it does not look like that is happening very quickly, in fact Apple’s favourite news agency –Reuters admits it is not happening at all.
Apple has aggressively courted retailers – and claimed “significant success” with half of the top merchants agreeing to use it.
However interviews with analysts, merchants and others suggest that Apple’s forecast may be too optimistic and that many retailers remain sceptical about the payment system.
Part of the problem is that it is super good for Apple, customers are locked in more tightly to its phones and its new smart watch and it collects a tithe from retailers.
That is the problem, there is absolutely no reason for cash strapped retailers to use the payment system at all, and there is a bag of pain if they do.
Reuters rang up all the top retailers and could only find four who said they have plans to join the program in the next year.
The top reasons retailers cited for not accepting Apple Pay were insufficient customer demand, a lack of access to data generated in Apple Pay transactions and the cost of technology to facilitate the payments.
Some merchants said they were holding out because they plan to participate in a new mobile payment system to be launched by a coalition of retailers later this year.
Reuters has done its best saying that Apple Pay’s market share has grown dramatically and there was more acceptance of Apple Pay. But at the end of the day, it has to admit that the system is a large turkey gobbling its way to Christmas.
Apple’s sales teams have been out in full but surprisingly its Apple fanboys have not been asking for the service at all.
Apple’s business partner in all this IBM also admits things are not going that well. Alberto Jimenez, program director for mobile payments at IBM said Apple has yet to answer the question “what is in it for us if we use Apple Pay?”
The program doesn’t offer loyalty rewards to customers, nor does it provide customer information to retailers about Apple Pay users. In short it is a chocolate teapot.
Apple Pay appears to have spurred the company’s competitors to get in on the mobile payment act and a report today said that global shipments of moble phones using near field communications (NFC) totalled 400 million units last year.
That, according to research company Topology, is about 20 percent of total shipments worldwide last year.
Topology predicts that this year that figure will rise to 30 percent this year but the story isn’t over yet. Analysts think the percentage will amount to 60 percent of 1.2 billion units in 2018.
However, there is one challenge vendors have to face, and that’s security.
Ariel Chen, Topology semiconductor analyst, said that trading money over mobile phones needs “very high” security standards and hardware here is better than software.
Chen claims that criminals can use their own iPhones to make payments with card information they’ve stolen.
The answer to this is semiconductor manufacturers working closely with banks and better verification for customers.