Big four banks roadblock in Apple Pay rollout

Tech giant Apple has run into a roadblock in the form of Australia’s big four banks, Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC), trying to rollout its Apple Pay system.

Apple released its Apple pay mobile payment system in Australia in November, but only American Express cards issued directly by American Express can use it so far. No deals have been signed with the big four as yet, although it is early days.

Foad Fadaghi, managing director of technology research firm Telsyte has told Fairfax Media, “The banks here feel like they’ve done the hard work in bringing in contactless payments already to Australia, and Apple is going to come in…and eat their lunch.

That suggests it may take some time before and even if the big four accept Apple Pay.

Apple Pay works by storing your credit or debit card securely in the Wallet app on your phone, allowing consumers to swipe their phone near a contactless terminal as if it were a contactless credit or debit card. It works with both Visa’ PayWave and Mastercard’s PayPass contactless terminals.

Commonwealth Bank already allows its customers with the Netbank app on their Android smartphones to make payments using their phone, but requires iPhone users to purchase a smart tag which sticks to the smartphone before they can make similar payments.

Westpac has a similar app – also only available for a limited number of Android smartphones. ANZ doesn’t appear to have an app yet, neither does NAB.

Cuscal and CUA (Credit Union Australia) has a similar app called redi2PAY which again allows Android smartphone owners to use their phone like a credit or debit card and pay for contactless transactions, but according to CUA’s website, only works with Visa PayWave, no mention of Mastercard’s PayPass.

Apple has reportedly had issues in other countries with the rollout of Apple Pay, including the UK, with Barclays the only major bank holding out according to recent reports. Most banks in the UK signed up around two months after Apple Pay launched, suggesting Australia’s big four banks may do a deal early in the New Year, if they do go ahead.

One of the issues though is that Apple Pay in the UK requires a minimum £30 transaction – something Commonwealth Bank’s payment app doesn’t have. Whether Apple Pay will have similar restrictions in Australia is as yet unknown, although American Express doesn’t appear to have any restrictions.

Foolish takeaway

Paperless currency appears to be coming sooner rather than later, despite the current road block by the banks in Australia, and Apple Pay is likely to be available for most bank customers early next year.

Why These 3 Blue Chip Shares Look Set to Soar in 2016

Discover The Motley Fool's top 3 blue chips for 2016. These 3 "new breed" shares pay fully franked dividends AND offer the very real prospect of significant capital appreciation. Simply click here to gain access to this comprehensive FREE investment report.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.