Apple is quite unhappy with the attempts of the Australian banking industry to undermine its introduction of Apple Pay. In July, four big financial institutions applied to the Australian Competition and Consumer Commission (ACCC) to negotiate with the Cupertino-based firm in respect to mobile payments.Apple Pay for iOS 10

Reduce choices and slow innovation

For the banks, including the Commonwealth Bank of Australia, Westpac, Bendigo and Adelaide Bank, and National Australia Bank, the fight is mainly about the fact that the iPhone making giant does not let outside banking applications use its iPhone hardware because it offers its own Apple Pay service.

The application states, “Apple’s refusal to provide third-party apps with any access to the [near-field communication] functionality of its devices sets it apart from other hardware manufacturers.”

The NFC antenna lets a smartphone communicate with a payment terminal and not a third-party app.

Apple has hit back at what it calls the banks’ “misstatements” and “innuendo.” The U.S. firm argues that the demands of the banks would create a security threat. The submission, which was signed by Marj Demmer (Apple Pay’s local head), urges the ACCC to reject the banks’ application. The U.S. firm claims it would be risky to open up its NFC functionality to the banks.

Apple called the banks a “cartel” and suggested that granting their application would only produce anti-competitive repercussions forAustralian customers. The banks that submitted the application collectively account for 70% of household deposits and 66% of Australian credit card balances, notes the tech giant. The U.S. firm says the request would reduce choices and slow innovation by safeguarding members of the cartel from competition with each other.

Opening up Apple Pay could jeopardize security

By using a system of tokenization, Apple Pay keeps payments secure. The application creates a unique token as a stand-in rather than sharing the user’s credit card information during a transaction. The app shares the token with the point of sale. Using their fingerprint via Apple’s Touch ID system, users submit a payment as well. The unique account number of the device and the fingerprint are stored on the iPhone separate from the device’s operating system, iCloud and Apple Pay servers.

“Our hardware, software and services are built in a deeply integrated manner so we can provide the highest possible security,” it writes.

In the submission, the U.S. firm says that negotiations started with Australian banks in late 2014. The contact-less payments service was launched in November, and only American Express was on board then. In April, ANZ, its major banking partner, came on board.