Aussie banks, retailers snub Apple for contactless payment service

Australia's banks and major retailers have decided to snub Apple and instead chosen Google's Android service for contactless payments via Visa, MasterCard and Eftpos when it rolls out in Australia in 2016.

Australian businesses have largely been slow in the uptake of the Apple Pay service since its launch last month as the company initially went with American Express for local transactions.

Apple demanded a cut of 2.5 billion Australian dollars (1.8 billion U.S. dollars) in interchange fees from Visa and MasterCard, which was refused by local banks as their fees are much less than their U.S. rivals.

"You have had a clash of egos. Apple and the oligopoly of the Australian banks," Grant Halverson, a payments consultant from Mclean Roche, told Fairfax Media on Wednesday.

"They both decided they couldn't manage that," Halverson said.

It's understood that Apple Pay is now making a new offers to Australia's banks which includes taking a lower cut of the Visa and MasterCard interchange fees.

Westpac, ANZ and major retailers such as Wesfarmer's supermarket brand Coles are among the businesses that will accept contactless payment via Visa and MasterCard through Google's new Android service.

Customers will use their mobile devices in the same fashion they currently use a contactless credit or debit card in stores, with the added benefit of storing gift cards, loyalty cards and special offers in the one place.

"Aussies will be able to use Android Pay everywhere contactless payments are accepted," Google product management director Pali Bhat wrote in a blog post that served as the announcement.

Almost 70 percent of all Australian credit card transactions are now via the "tap and go" method, meaning merchants will be able to accept the Android Pay almost immediately. Endit