Now we tend to think of our big four banks as, well, big. CBA; Westpac; ANZ and the NAB sit at numbers one; three; five and six respectively on our ASX200 by market capitalisation.
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Then there is Apple.
Apple alone is the equivalent size of the combined largest 56 companies on the Australian ASX200.
Way back in 2016, I wrote a column that discussed the ongoing technology battle in Australia between Apple and a group of our big banks.
The battle all relates to Apple Pay. On September 9, 2014, Apple announced that they were launching Apple Pay. It gave users of certain models of Apple phones and watches the ability to use their Apple device to make a payment instead of using a contactless card.
That all sounded wonderful but, of course, Apple wanted a little slice of the interchange fees. In Australia, they add up to almost $3 billion annually. The big four banks in Australia are accustomed to being able to flex their individual or collective muscles and get what they want.
When Apple knocked on Australia's door in 2016, Apple dictated the terms.
The banks didn't like that so CBA; Westpac; NAB and Bendigo and Adelaide Bank put a joint submission to the ACCC to allow them to take on Apple as a group.
ANZ didn't join the joint action. On April 28, 2016, they announced that ANZ users could start to use Apple Pay. Almost immediately, online credit card applications for ANZ increased by 20 per cent and traffic to their website increased by 6 per cent.
Within four months, over a quarter of a million ANZ customers were using Apple Pay.
It must have been killing the other banks seeing them bleed customers to ANZ while they waited for a determination by the ACCC.
On March 31, 2017, the ACCC announced that they were denying the application by the four banks to collectively boycott and bargain with Apple Pay. "Damn!" said the banks. "Yay!" said Apple. "Who cares?" said consumers." If we want to use Apple Pay, we will just apply for an ANZ card."
The CBA was the first to give in. On January 23 this year, CBA customers could finally start using Apple Pay. The details are confidential, of course, but I can guarantee that the agreement would not have been as favourable as the ANZ deal. Westpac and NAB continue to hold out on Apple but mounting pressure from customers and shareholders will see them finally come to the party.
Australian bank data shows that 74 per cent of all MasterCard in-store transactions are now contactless and that per capita, contactless payments in Australia are amongst the highest in the world. It won't be a matter of if but when the rest of the banks join ANZ and CBA in offering Apple Pay to their customers.
