Apple (AAPL): Australian Banks Soften Stance on Apple Pay

Apple Inc.AAPL has been facing tremendous challenges in Australia as the banks had been opposing to acknowledge Apple Pay, the way they accepted Android Pay.

Apple's demand of 15 basis points in interchange fees had made the deal less palatable for Australian banks. Additionally, the company blocks third-party payment apps from iPhone unless they sign up for Apple Pay. Reuters observes that "Apple charges card providers for transactions made using Apple Pay and does not allow companies to develop their own mobile wallets, which would allow banks to circumvent transaction fees and get customers to engage more frequently with their own apps."

Australia has a very big market for contactless payments and fees for processing such transactions are a big source of income for regional banks. Android Pay has not demanded any such charges. As a result, the banks are happy collaborating with Android Pay.

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Now, per media reports, recent developments imply that Australian banks after being rebuffed by the country's anti-competition regulator, will give up on their demand for fee removal. Instead these banks will solely focus on "gaining access to the U.S. tech company's contactless payment function."

Australia and New Zealand Bank had agreed to sign up for Apple Pay last year, while National Australia Bank, Bendigo and Adelaide Bank, Commonwealth Bank of Australia as well as Westpac Banking Corp continued to negotiate with Australian Competition and Consumer Commission (ACCC). These banks had asked for a collective negotiating power with Apple over fees and access to the contactless payments technology, which was rejected by ACCC.

Reportedly, Macquarie Group Ltd and ING Groep NV's ING Direct are likely to start offering Apple Pay from this month itself.

In Sep 2014, Apple unveiled its mobile payment solution, Apple Pay, designed on the basis of a contactless payment technology, to offer a hassle-free experience. The service has now been expanded to 13 markets like the UK, Australia, Canada, China, Hong Kong, Switzerland, Japan, Russia, New Zealand and Spain. In the first quarter of 2017, Apple Pay transactions surged about 500% on a year-over-year basis.

At present, Apple has a Zacks Rank #3 (Hold).Apple's shares have marginally outperformed as the broader market over the past one year. Over the past one year, shares of Apple have registered growth of 20.65%, compared with the Zacks Computer Mini industry's gain of 19.58%.

A few better-ranked stocks in the wider technology space include Jabil circuit Inc JBL HealthStream, Inc. HSTM ,and MeetMe, Inc. MEET . While Jabil carries a Zacks Rank #1 (Strong Buy), other two carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

In the trailing four quarters, Jabil, HealthStreamand MeetMe have yielded positive average earnings surprises of 45.61%, 7.29% and 36.07%, respectively.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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