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Apple spoke up again about its ongoing battle with several of Australia's largest banks.
These banks, including Commonwealth Bank, National Australia Bank, and Westpac, are waiting on word from the Australian Competition and Consumer Commissions (ACCC) about whether they’ll be able to jointly negotiate with Apple with access to the iPhone hardware necessary to build their own mobile wallets for the platform rather than sign on with Apple Pay.
Apple believes that joint negotiations between the banks would “perpetuate oligopolistic banking market conditions” since the banks in question represent roughly two-thirds of Australian cardholders, according to CNET. The tech giant also believes that Apple Pay isn’t stifling competition, but rather serves as an “example of competition and innovation that the applicants evidently perceive […] as a threat.
Though it’s understandable why the banks feel limited by Apple Pay, they could be losing more from not offering it.
In Australia, most major banks offer a widely used proprietary mobile wallet for Android users. The success of these proprietary services for Android, which banks can offer without charging consumers an additional fee, sets a precedent for launching a similar product on iPhone if they can gain access to the hardware. Until then, though, Apple's tight control over its products means that roughly 41% of the Australian smartphone market is widely left out of the mobile payment ecosystem, which means banks can't capitalize on this demand without joining Apple Pay.
As a result, offering Apple Pay could be more of a competitive advantage than waiting to join in on the negotiations. ANZ, the fourth major Australian bank, launched Apple Pay for its Visa and Amex cardholders in April, and added support for Mastercard this week. In the days following launch, demand for deposit accounts “skyrocketed.” Since then, 20% of the bank’s customers have reportedly uploaded their payment information into the service, according to The Australian. For context, that’s much higher than US usage of Apple Pay, which had only seen 23.8% adoption over a year after launch. The case of ANZ illustrates that, though banks could stand to gain from launching a proprietary product, it might be more lucrative to join with Apple Pay and capitalize on pent up demand for mobile payments among Australian iPhone users than to wait it out.
Thanks to services such as Apple Pay, mobile payments are becoming more popular, but they still face some high barriers, such as consumers' continued loyalty to traditional payment methods and fragmented acceptance among merchants. But as loyalty programs are integrated and more consumers rely on their mobile wallets for other features like in-app payments, adoption and usage will surge over the next few years.
Evan Bakker, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on mobile payments that forecasts the growth of in-store mobile payments in the U.S., analyzes the performance of major mobile wallets like Apple Pay, Android Pay, and Samsung Pay, and addresses the barriers holding mobile payments back as well as the benefits that will propel adoption.
Here are some key takeaways from the report:
In our latest US in-store mobile payments forecast, we find that volume will reach $75 billion this year. We expect volume to pick up significantly by 2020, reaching $503 billion. This reflects a compound annual growth rate (CAGR) of 80% between 2015 and 2020.
Consumer interest is the primary barrier to mobile payments adoption. Surveys indicate that the issue is less the mobile wallet itself and more that people remain loyal to traditional payment methods and show little enthusiasm for picking up new habits.
Integrated loyalty programs and other add-on features will be key to mobile wallets taking off. Consumers are showing interest in wallets with integrated loyalty programs. Other potential add-ons, like in-app, in-browser, and P2P payments, will also start fueling adoption. This strategy has been proved successful in China with platforms like WeChat and Alipay.
In full, the report:
Forecasts the growth of US in-store mobile payments volume and users through 2020.
Measures mobile wallet user engagement by forecasting mobile payments' share of their annual retail spending.
Reviews the performance of major mobile wallets like Apple Pay and Samsung Pay.
Addresses the key barriers that are preventing mobile in-store payments from taking off.
Identifies the growth drivers that will ultimately carve a path for mainstream adoption.
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