(Recast) Aussie banks, retailers snub Apple for Google's contactless payment service

Australia's banks and major retailers have snubbed Apple and instead chosen Google's Android service to accept contactless payments via Visa, MasterCard and Eftpos when it rolls out in Australia in 2016, the first country outside the U.S. since its launch in May.

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

Apple demanded a cut of the 2.5 billion Australian dollars (1.8 billion U.S. dollars) in interchange fees from Visa and MasterCard, which was refused by Australia's 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."

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

Major Australian banks Westpac and ANZ - and their subsidiaries - as well as 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 when it rolls out throughout the year.

Customers will use their mobile device 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