Explainer: Why Apple Pay is the focus of RBA regulatory supervision

Apple Pay looks simple. Hold an iPhone near a payment terminal, authenticate the purchase and the payment is made.

Behind that tap, however, sits a complicated chain involving Apple, your bank, a card network such as Visa, Mastercard or eftpos, the merchant's bank and several pieces of technology. The Reserve Bank is now asking whether control over parts of that chain gives mobile-wallet providers too much influence over competition.

This matters because mobile payments are becoming mainstream. In the RBA's 2025 Consumer Payments Survey, 43% of Australians used a mobile device to make a contactless payment during the survey week, up from 35% in 2022. Parliament has also expanded the RBA's regulatory remit to cover participants such as mobile wallets.

First: what exactly is Apple Pay?

Apple Pay is not itself a bank or card network.

Think of it as a secure digital layer sitting over your existing card. Instead of transmitting your actual card number, the wallet normally uses tokenisation: your card details are replaced with a substitute digital number, or token.

Your iPhone then communicates with the shop's terminal using near-field communication, or NFC — the short-range radio technology behind “tap and go”.

This architecture brings significant security benefits. Apple argues that tokenisation and device authentication mean Apple Pay transactions have materially lower fraud rates than conventional card transactions. More than 125 Australian financial institutions now support Apple Pay.

So where is the competition problem?

Consider an ordinary Australian debit card.

About 90% of debit cards have traditionally been dual-network debit cards. That means the same card can potentially send a payment through either Australia's eftpos network or an international network such as Visa Debit or Debit Mastercard.

The shop may pay different fees depending on which network processes the transaction.

That creates the idea of least-cost routing. Instead of automatically sending every transaction through the default network, the merchant can route an eligible payment through whichever network is cheaper.

The RBA likes this because it creates competition: eftpos, Visa and Mastercard have an incentive to keep their costs down.

But mobile wallets complicated that system.

When debit cards were first tokenised for mobile and online payments, submissions to the RBA say only the international card networks could support those transactions. eftpos was therefore sometimes missing from the digital version of a dual-network card, meaning merchants could not choose it even if eftpos would have been cheaper.

eftpos has since developed the necessary technology, but stakeholders told the RBA that retrofitting a second network token into established wallets can be technically difficult.

Why does the iPhone itself matter?

A second issue is access to the phone's NFC technology.

Historically, Apple tightly controlled access to the technology allowing an iPhone to make contactless payments. Since October 2024, Australian developers have been able to apply to Apple's NFC & Secure Element Platform to develop alternatives.

Some submissions argue that the conditions remain too restrictive or commercially unattractive for rival wallets to compete effectively. They point to Europe, where Apple has provided fee-free access to different NFC technology following regulatory intervention.

Apple strongly disputes this. It says Australian developers already have access, that Apple Pay is available to institutions of all sizes on equal terms and that its platform encourages rather than restricts competition.

Then there are Apple's fees

Banks pay Apple when customers use Apple Pay.

Some stakeholders told the RBA that these fees have not fallen despite transaction volumes rising and unit costs declining. They also argue that even large banks have little ability to negotiate, while the fees are generally invisible to merchants and consumers.

Apple's response is that its fees reflect the security and other value Apple Pay provides, are uniform between issuers and have not increased since launch. Apple also says its contracts do not allow it to increase the fees unilaterally.

That disagreement gets to the heart of the regulatory question.

The RBA is not deciding whether Apple Pay is a good product. It is asking whether control of the device, wallet and customer interface gives Apple the ability to influence fees, competitors and which payment network ultimately carries a transaction.

Stakeholders have proposed everything from publishing Apple Pay fees and opening NFC access on fair terms to examining contractual conditions and, potentially, regulating prices.

The RBA has not accepted those arguments. Its next step is to decide which issues justify deeper investigation.

The bigger question is one the payments system increasingly faces everywhere:

When a technology company controls the doorway through which consumers make payments, how much control does it gain over the market behind the doorway?