Zip accuses banks of anti-competitive behaviour, RBA eyeing Apple

James EyersSenior Reporter

Jul 26, 2021 – 4.00pm

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Australia’s banks and US tech giant Apple have separately been accused of potential anti-competitive behaviour, with Zip fingering banks for forcing the closure of buy now, pay later accounts before approving mortgages while the Reserve Bank raised concerns about Apple’s limits on access to its iPhone’s payments wallet.

In provocative testimony to a joint parliamentary committee probing the rise of digital wallets, Zip co-founder Peter Gray said the most common cause of Zip account closures is a demand from a bank before agreeing to write a mortgage. Committee chairman Andrew Wallace said the conduct sounded like a form of ‘third-line forcing’.

Zip co-founder Peter Gray accused banks of forcing BNPL accounts to be closed before approving mortgages. Louise Kennerley

Banks assess BNPL accounts in “a negative light”, Mr Gray said, adding: “I can confirm to the committee the number one reason for customers closing their Zip account is the bank has told them they need to, to proceed with the mortgage.”

But the average Zip customer had a higher credit score than those seeking bank finance and forcing buy now, pay later accounts to be shut was more likely motivated by “the level of engagement our service has with customers” and Zip representing “a competitive threat”, Mr Gray said. He suggested banks are using their market power to cross-sell the mortgage customer a more expensive credit product.

“It is potentially one for the banks to answer, but are they instructing their customers to close buy now, pay later accounts to have a mortgage settled and then offering them a credit card in lieu of them closing that account?” he asked the committee.

Commonwealth Bank CEO Matt Comyn will appear before the PJC on Tuesday morning where he may be asked to respond to the suggestions.

Meanwhile, during an earlier appearance on Monday, RBA head of payments Tony Richards suggested it could be the banks who are being disadvantaged by a larger player - Apple.

The RBA’s submission to the committee pointed to restrictions Apple places on access to the ‘near field communications’ (NFC) chip in iPhones, which communicate with tap and go terminals. “There certainly are potential competition issues with respect to access to the NFC chip,” Dr Richards told the committee.