Apple opens third-party payments for Australian iPhones
Apple has announced Australian iPhones will soon support third-party contactless payments, which will roll out with iOS 18.1.
Apple has announced Australian iPhones will soon support third-party contactless NFC payments, which will roll out with iOS 18.1
This feature leverages the iPhone’s NFC chip and Secure Element, and will allow developers to offer contactless payments and other NFC-based services directly through their own apps. This will be independent of Apple Pay and Apple Wallet.
The update will initially be available in Australia, New Zealand, Brazil, Canada, Japan, the UK and the US.
This follows the introduction of Tap To Pay on iPhone to the Australian market in 2023. This allows businesses to accept contactless card and digital wallet payments, with just an iPhone and a supporting iOS app.
One of the key benefits of the NFC update will be the ability for users to set a third-party app as their default contactless payment method via their iPhone’s Settings.
This means users will no longer be limited to Apple Pay for contactless transactions.
But it’s not just about payment providers.
Apple highlighted the versatility of its NFC chip in its announcement, which can also be used for car keys, event tickets, loyalty cards, hotel keys and more.
Government IDs are also expected to be supported in future updates.
“By opening up NFC, it theoretically could allow for digital car keys for our subscription cars. Car key loss is an issue for our business. While it’s not a major problem, NFC integration of car keys is another pain point we can ease for our customers,” Desmond Hang, CEO of Carbar, said to SmartCompany.
Hang pointed out that the added challenge is how this will be rolled out by automakers.
“They would need to create the functionality here. Tesla, for instance, already has this, however they currently use Bluetooth rather than NFC. It’s administered via the Tesla App which isn’t built to be used for subscriptions.
“It’s difficult for us to add a subscriber to that application as a user of the car without designating them as the owner.”
Questions have also been raised around the revenue generation of opening up the NFC ecosystem.
“It’s great that Apple is opening up NFC payments on iPhones to third parties, however before we get ahead of ourselves it’s important to be able to understand the commercial agreements,” Luke Fossett, General Manager, GoCardless Australia and New Zealand, said to SmartCompany.
Fossett pointed out that similar to interchange or scheme fees from card networks, Apple is unlikely to offer access for free. This is a good point, particularly when Apple also takes a 30% cut on most App Store purchases.
“I am hopeful there will be room for entrepreneurs and small businesses to scale their ideas within the Apple Wallet infrastructure, without Apple’s cut impacting their viability.” Fossett said.
“For now, the idea of having my gym membership, digital house keys, or work pass all on my phone is exciting—purely for the convenience.”
A welcome update after pressure on Apple
Apple’s decision to open up the NFC chip to third-party apps comes on the heels of regulatory pressure in the European Union for the company to comply with the Digital Markets Act.
Here in Australia, the Commonwealth Bank (CBA) called for RBA regulation of Apple Pay and other big tech platforms within the financial services sector. At the time, CBA stated that third parties should have “reasonable and equivalent” access to iPhone NFC chips to allow for direct payment from financial institution apps.
Apple defended its position on NFC access previously, stating it “does not provide uncontrolled access by third parties to the NFC antenna, as this would undermine the seamless customer experience for switching cards and create avenues for third parties to hack into iPhone and Apple Watch, to access the sensitive data stored within these devices”.
For developers looking to take advantage of NFC access, Apple has outlined a process that involves entering into a commercial agreement with the company, requesting the NFC and SE entitlement, and paying associated fees.
Apple is yet to release details about the fee structure, but developers can visit the Apple Developer website to submit expressions of interest.
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