Australia Continues to Scrutinize Apple Pay Amid Push for Regulation

[MacRumors]

The government of Australia is considering creating new laws that could more heavily regulate digital payments systems such as Apple Pay, Google Pay, and WeChat Pay (via Reuters).

An Australian government-commissioned report into digital payments systems has made a number of recommendations, one of which suggested actively regulating Apple Pay and other similar digital payments services. Speaking to the Australian Financial Review, Treasurer Josh Frydenberg said that the recommendations would be carefully considered:

Ultimately, if we do nothing to reform the current framework, it will be Silicon Valley alone that determines the future of our payments system, a critical piece of our economic infrastructure.

Under current Australian law, the likes of Apple Pay are not classified as payment systems, putting them outside payment regulations. Classifying Apple Pay as a payment system would clarify the regulatory status of digital wallets in Australia and allow the government to explicitly designate big tech companies as payment providers.

Other recommendations, contingent on classifying Apple Pay as a payment system, look to establish a strategy for the country's wider payments ecosystem with a single, integrated licensing framework.

Australian banks such as the Reserve Bank of Australia and the Commonwealth Bank of Australia have previously raised concerns around the growth of digital wallets with "competition issues" and purported safety implications. Earlier this year, an Australian Parliamentary Committee considered forcing Apple to open up the iPhone's NFC chip to support third-party payment systems in an effort to promote competition.

Article Link: Australia Continues to Scrutinize Apple Pay Amid Push for Regulation

 

[Mrjetsondc]

In other words, Visa and MC are crying and trying to flex their lobbying power.

 

[justperry]

"Ultimately, if we do nothing to reform the current framework, it will be Silicon Valley alone that determines the future of our payments system, a critical piece of our economic infrastructure."

Exactly this.
Also agree to open up NFC, as in, force Apple to open up NFC.

 

[jace88]

Australian banks such as the Reserve Bank of Australia and the Commonwealth Bank of Australia have previously raised concerns around the growth of digital wallets with "competition issues" and purported safety implications.

I don’t know if it’s really fair to call the RBA a bank in the same context as say Commonweath Bank, a for profit retail bank. The RBA is the central bank for Australia (ie a fundamentally different role to a typical bank, like the US Fed) and also is tasked with regulating payments, so their view is going to be somewhat different to a typical participant in the sector.

 

[RedWing512]

If the Australian government doesn't like it, then Apple is doing something right.

 

[miniyou64]

Government wanting their hand in everything despite the fact that they are without fail totally incompetent? Hmmm couldn’t be

 

[Expos of 1969]

The Australian Government should have put a bit of effort into purchasing and administering vaccines rather than this perhaps...

 

[840quadra]

"Ultimately, if we do nothing to reform the current framework, it will be Silicon Valley alone that determines the future of our payments system, a critical piece of our economic infrastructure."

Exactly this.
Also agree to open up NFC, as in, force Apple to open up NFC.

What would be the benefit of opening NFC?

Personally I am not 100% up to speed on the tech, but one of the biggest draws to a closed NFC and randomized payment system is the security. I don't want to go back to worrying about people cloning my CC after using a skimmer.

 

[justperry]

What would be the benefit of opening NFC?

Personally I am not 100% up to speed on the tech, but one of the biggest draws to a closed NFC and randomized payment system is the security. I don't want to go back to worrying about people cloning my CC after using a skimmer.

We have a Digital ID system here, there are several security levels, as an iPhone user
I can't go higher than a certain level because NFC is not open on an iPhone.
The system has all kinds of benefits, for instance insight in your medical files amongst
many more.

 

[icanhazmac]

I don't get the problem? Big banks have the cards that are tied to most people's Apple Pay so they are still getting paid via the interest charged on a CC balance.

 

[840quadra]

We have a Digital ID system here, there are several security levels, as an iPhone user
I can't go higher than a certain level because NFC is not open on an iPhone.
The system has all kinds of benefits, for instance insight in your medical files amongst
many more.

Fair enough, and seems like valid concerns!

I understand the digital ID system, as we are looking at incorporating that in the US too. That said, I don't understand what you mean by going higher than a certain level due to NFC being closed. You need more access as a user or developer? And if you don't mind my asking, access to do exactly what?

 

[Denzo]

I feel like the government is finally waking up to the billions of dollars leaving the country in payments that should be increasing Australia’s GDP.
IF we are talking about the system - I feel more strongly on this type of thing with “Uber”.
Some poor person who gets up everyday, probably 7 days a week, pays rent, manages employees, manages stock, speaks with customers, cooks cleans and whatever else - and donates 30% of profits to a company for simply providing an ordering mechanism for people via an app together with a support service centre in the Phillipines - it’s daylight robbery and I can’t believe more people don’t get in the car to pick up their food instead of watching local businesses profits getting trashed like this.
end rant/

 

[Wildkraut]

What would be the benefit of opening NFC?

Personally I am not 100% up to speed on the tech, but one of the biggest draws to a closed NFC and randomized payment system is the security. I don't want to go back to worrying about people cloning my CC after using a skimmer.

The benefit is competition and an open payment infrastructure that does not depend of one or two payment providers.
You can still keep using ApplePay if you feel saver placing your bet on one horse, but a payment infrastructure must remain open. Apple is just building up another Gate in here.

NFC shall be usable by anyone who want's to access it, it's just a more complex barcode reader, nothing more.
But Apple is limiting the NFC chip access and pushing anticompetitive business practices further forward.

 

[justperry]

Fair enough, and seems like valid concerns!

I understand the digital ID system, as we are looking at incorporating that in the US too. That said, I don't understand what you mean by going higher than a certain level due to NFC being closed. You need more access as a user or developer? And if you don't mind my asking, access to do exactly what?

I can't register both my Drivers licence and my Passport/ID into the system, it gives me more privileges, the reason I can't is because both ID documents have an NFC chip inside, which is inaccessible due to the closed NFC system on an iPhone.

 

[XXPP]

"Ultimately, if we do nothing to reform the current framework, it will be Silicon Valley alone that determines the future of our payments system, a critical piece of our economic infrastructure."

Exactly this.
Also agree to open up NFC, as in, force Apple to open up NFC.

You can use android or contactless card. Nobody force you to use apple pay.

 

[XXPP]

I can't register both my Drivers licence and my Passport/ID into the system, it gives me more privileges, the reason I can't is because both ID documents have an NFC chip inside, which is inaccessible due to the closed NFC system on an iPhone.

Buy android. In my country government created iPhone "id, driver licence, car info, health etc." app and everything works.

 

[ksec]

This is just Insane. It is Apple's iPhone, Apple's App Store, Apple's NFC and Payment System. And Apple will push out a new press release stating how much billions of dollar along with how many jobs they have contributed to Aus market. Apple should pull out of the Australian market! Add AUS to the list of market Apple should pull out, EU, UK, South Korea, AUS.... /s

It is always fun to watch Macrumor suggest Apple should pull out of every market. But surprisingly enough not once did they mention pull of US market.

 

[840quadra]

The benefit is competition and an open payment infrastructure that does not depend of one or two payment providers.
You can still keep using ApplePay if you feel saver placing your bet on one horse, but a payment infrastructure must remain open. Apple is just building up another Gate in here.

NFC shall be usable by anyone who want's to access it, it's just a more complex barcode reader, nothing more.
But Apple is limiting the NFC chip access and pushing anticompetitive business practices further forward.

Fair & valid points, and I totally conflated the NFC system with the back end that randomizes the numbers it is transmitting to readers in Apple Pay and similar systems. You're right, it is essentially just a radio that sends or receives simple digital data.

Apple's closed ecosystem continues to frustrate in new ways these days.

 

[gaximus]

You don't have to use it. Regulate the banks in Australia to allow other forms of payment. Is there a law that says banks have to allow Visa or MasterCard, and if so can a bank only use one, or do they have to provide the customer with the option? Couldn't a bank say we only allow checks? Or start supporting Crypto currency? It's just a payment type. Give the customers choice.

 

[Mrjetsondc]

I feel like the government is finally waking up to the billions of dollars leaving the country in payments that should be increasing Australia’s GDP.
IF we are talking about the system - I feel more strongly on this type of thing with “Uber”.
Some poor person who gets up everyday, probably 7 days a week, pays rent, manages employees, manages stock, speaks with customers, cooks cleans and whatever else - and donates 30% of profits to a company for simply providing an ordering mechanism for people via an app together with a support service centre in the Phillipines - it’s daylight robbery and I can’t believe more people don’t get in the car to pick up their food instead of watching local businesses profits getting trashed like this.
end rant/

“Angry man yells at clouds”. Your rant only makes sense in 1930. The world is global. So is business.

 

[ksec]

Fair & valid points, and I totally conflated the NFC system with the back end that randomizes the numbers it is transmitting to readers in Apple Pay and similar systems. You're right, it is essentially just a radio that sends or receives simple digital data.

Apple's closed ecosystem continues to frustrate in new ways these days.

There are other parts of Apple Pay system, which apple collect a percentage for every transaction. While they are comparatively small in the US system where credit card charges are up to 4% or a median of 2%. AUS ( along with pretty much every other country on the planet ) has much lower rate. Ultimately this is eating into bank's profit.

 

[RadioHedgeFund]

Government wanting their hand in everything despite the fact that they are without fail totally incompetent? Hmmm couldn’t be

I do love how our western right wing governments, whose doctrine literally states it should mind it’s own business and leave private people and enterprise alone is trying to put its fingers into as many totalitarian pies as possible.

 

[sw1tcher]

In other words, Visa and MC are crying and trying to flex their lobbying power.

Maybe they are looking out for the consumer.

It's like with PayPal. They're not classified as a bank and therefore can get away with, and have gotten away with, a lot of B.S. That's one of the reasons why a few years ago the CFPB subjected them and other digital payment platforms to more government oversight and consumer protections.

Apps Like Venmo to Come Under Stricter Government Oversight

Popular mobile-payment apps including PayPal Holdings Inc.’s Venmo and Alphabet Inc.’s Google Wallet will be subject to more stringent government oversight under a CFPB regulation covering prepaid cards completed Wednesday.

www.wsj.com

Popular mobile-payment apps including PayPal Holdings Inc.’s Venmo and Alphabet Inc.’s Google Wallet will be subject to more stringent government oversight under a regulation completed Wednesday.

The rule from the Consumer Financial Protection Bureau covers prepaid cards and other prepaid accounts, aiming to bring oversight of the rapidly growing sector closer to regulations covering banks. . . the CFPB views the products as requiring similar types of oversight to ensure customers’ money is safe.

The rule requires firms to limit consumers’ losses when funds are stolen or cards are lost, investigate and resolve errors and offer clearer disclosures on fees and product features. Most aspects of the rule will be effective Oct. 1, 2017, with the rest coming into effect a year later.

The rule won’t cover digital wallets that simply store payment credentials, such as consumer bank-account and credit-card information, as in the case of Apple Inc.’s Apple Pay.

Prepaid accounts are among the fastest-growing corners of the financial market, thanks to new technology and innovation that have ushered in waves of new products with functions that rival bank checking accounts.

The new rule marks Washington’s first comprehensive effort to police the market, which caters to about 23 million Americans annually, many of whom are lower-income and have no or limited access to banks

“The rapidly growing ranks of prepaid users deserve a safe place to store their money and a practical way to carry out their financial transactions,” CFPB Director Richard Cordray told reporters on a call.

Digital wallets and prepaid cards look increasingly similar. Both enable customers to store funds and make transfers and payments, and offer online and mobile access to accounts.

“The bureau believes that consumers who transact using digital wallets deserve the same protections as consumers who use other prepaid accounts,” the agency said. “Indeed, as with other prepaid accounts, a consumer’s digital wallet could fall victim to erroneous or fraudulent transactions.”

The significant role prepaid cards play in people’s lives was highlighted last year when customers of RushCard, a company founded by hip-hop producer Russell Simmons, were shut out of their accounts because of a technical glitch. Unable to pay bills, many customers aired their grievances on social media.




These payment companies need to be subject to more government regulation and oversight so consumers have more protections because randomly freezing or closing accounts with no access to funds is evil.

 

[Wildkraut]

Fair & valid points, and I totally conflated the NFC system with the back end that randomizes the numbers it is transmitting to readers in Apple Pay and similar systems. You're right, it is essentially just a radio that sends or receives simple digital data.

Apple's closed ecosystem continues to frustrate in new ways these days.

Yep, it' "just" about allowing other payment providers to have access the NFC hardware.
It's not about having access to the ApplePay backend infrastructure, they simply wan't to be able to use the NFC chip to read & write custom data.

Allowing NFC access would not add any security flaws to the Apple Pay System, simply because the data needs to be interpreted and is broadcasted on activation by the NFC terminals anyway. The security relies inside the backend infrastructure that handshakes and interprets the encrypted data read and written by the NFC hardware.

By limiting the NFC hardware access Apple makes sure no other Payment provider is able to offer a NFC payment on iOS, making it impossible to compete with Apple Pay, which is anticompetitive.
It's simply wrong to let one or two companies de facto take over the whole payment infrastructure and services of multiple countries.

But yeah Apple loves to twist the NFC topic in a way that makes it sounds like opening the pandora box to Apple Pay frauds. The same they do in other topics.

 

[justperry]

You can use android or contactless card. Nobody force you to use apple pay.

Buy android. In my country government created iPhone "id, driver licence, car info, health etc." app and everything works.

I have an iPhone, I don't want anything else, that's why I made my comment.

Here we need open NFC, I am not living in your country.
Why is it so hard to understand to open up NFC.
It's even invented by a company from the place I live, they should have refused Apple to not open NFC.

Why don't you get that, instead going on a rant.