Australian mobile payment transaction value to record a CAGR of 23% during 2016-2020; competition between banks and Apple set to intensify

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Australia is one of the leading countries across the globe which has witnessed high adoption of mobile payments. The Australian mobile payment market is expected to record a CAGR of 22.9% from 2016-2020 to reach US$ 115,585 million in transaction value terms by 2020. Australia’s big four banks have dominated the mobile wallet market for the past few years. However, with entry of Apple Pay late last year and the expected entry of both Android Pay and Samsung Pay this year, the market dynamics are sure to change. Entry of PayPal and telecom company Optus has helped in expanding customer choices beyond banks and intensified competition in the market. Mobile wallet providers are expected to focus on introducing innovative features that provide added convenience to customers in order to increase their market shares.

Australia is witnessing an ecosystem and power issue between its four large banks and a global technology conglomerate, Apple. In favor of its own Apple Pay, iPhone platform globally blocks digital wallets from third party providers. Conversely, four of the leading Australian banks have formed a cartel in order to persuade Apple to get their respective payment platform on iPhones. 

The Australian regulatory commission has received request from Commonwealth Bank of Australia, National Australia Bank, Westpac Banking Corp and Bendigo and Adelaide Bank to collectively negotiate with Apple. The banks have defended the move by saying they intend to provide wider options and better results for the Australian consumers. Even so, loss of revenue earned through interchange fees has been pointed as the cause of resentment among the banks.  Also, these banks have heavily financed the development of proprietary digital wallets that run on mobiles of millions of customers. However, other Australian banks like ANZ and American Express have accepted to adopt Apple Pay, to take advantage of NSW transport system that will allow trial of open loop tap and pay cards next year.    

iPhone, on the other hand, allows downloading of applications of various banks but restricts their use to mobile banking. It’s NFC (near field communication) technology can be accessed through Apple Pay only. The competitive landscape in the country is indeed unique and it is going to be interesting to see how things emerge over the next two years.

To know more and gain deeper understanding of mobile payment industry in Australia, click here.