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Apple Pay, Google Pay, you pay: RBA raises virtual wallet competition concerns.

By Shane Wright SMH


The Reserve Bank is making the case for an overhaul of the powers it has over the nation's network of credit and debit cards in the face of growing technological change, warning the rise of Apple and Google-linked virtual wallets could hurt financial competition.


Bank governor Philip Lowe, addressing the Australian Payments Network on Monday, said the current laws covering everything from cards to interchange fees between retailers and card providers were more than 20 years old.


The Morrison government has commissioned a review of the current system, with Dr Lowe arguing there may be need for changes to deal with the way payments are rapidly changing.


"While the powers are quite broad, in practice the bank has the ability to regulate only a fairly limited range of entities," he said.


"These regulatory powers have been used in conjunction with our ability to persuade and to help solve coordination problems in networks. "As part of the government’s review it is worth considering what the right balance is here and whether the regulatory arrangements could be modified to better address the complexities of our modern payments ecosystem."

Dr Lowe said technology-focused businesses in payments were driving much of the current innovation. These include so-called fintechs as well as large multinational technology firms that were known as "big techs".

He said the development of digital wallets, such as Apple Pay and Google Pay, were examples of these new payment systems that were being used more frequently by consumers.

"These wallets are clearly valued by consumers and they will reduce industry-wide fraud costs through the use of biometric authentication. So these wallets are a good innovation," he said.

Dr Lowe said Apple restricted access to the communication technology on its devices, which could be argued to restrict possible competition and increase costs.

Another issue is on the value of data on the wallets, with Google saying that it may collect information on transactions made through Google Pay, which could then be used to provide marketing or other Google services to users.

Apple says it does not collect transaction information that could be tied back to an Apple Pay user.


Dr Lowe said there were complex issues around the companies as they had very large user bases that could make it difficult for their competitors.

"Beyond the issues raised by digital wallets, there are other competition issues raised by the involvement of the big tech companies in payments," he said.

"Data analysis is part of their DNA and they have become increasingly effective at commercialising the value of data they collect and analyse.

"Providing additional services, such as payments, also reduces the need for users to ‘leave’ the platform."

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