Apple says opening its Pay app to banks would ‘fundamentally diminish’ security

By Katie Collins for CNET

It turns out Apple doesn’t take well to banks teaming up to get their own products on the iPhone.

That became clear after three Australian banks tried to pressure the tech giant into giving it access to the iPhone’s near-field communications, or NFC, chip for their own digital wallet applications. NFC is what allows you to tap your iPhone at the register to pay for goods and services.

Apple responded to the banks’ request last week with a strongly worded letter that came to light on Tuesday, explaining that letting the banks have their way would “fundamentally diminish the high level of security Apple aims to have on our devices.”

The iPhone’s NFC is the critical piece of tech that powers Apple Pay. The company keeps it under lock and key, reserving it solely for its own service. The introduction of Apple Pay has driven consumer interest in mobile payments, and hundreds of financial institutions around the world have partnered with Apple Pay to allow their customers to link their bank accounts to their iPhone digital wallets.

Australia, however, boasts only one participating bank: ANZ. Apple has so far failed to negotiate terms with any of its rivals, which appear to be collectively boycotting the service.

The Commonwealth Bank of Australia, the National Australia Bank and Westpac Banking Corp are attempting to challenge Apple’s digital wallet monopoly on the iPhone by appealing to the country’s regulator, the Australian Competition and Consumer Commission. They want permission to negotiate with Apple, with the hope of installing their own mobile payment system on the device.

But Apple is having none of it. Its own letter to the regulator contains a warning to the banks that it will not allow external parties determine its future hardware and software decisions, especially when they gang up against the company.

“Allowing the banks to form a cartel to collectively dictate terms to new business models and services would set a troubling precedent and delay the introduction of new, potentially disruptive technologies,” it reads.

The full letter also contains specific legal arguments by Apple as to why the bank’s request should not be taken forward by the ACCC. The regulator will start to consider arguments from groups on both sides — including Apple and the banks — after August 18.

Representatives for the banks did not immediately respond to requests for comment.

First appeared at CNET