Westpac Tap On Phone is a new service that will allow merchants to accept card payments via Android-based mobile devices. Westpac is teaming up with Quest Payment Systems, using the latter’s Airpay Tap technology to power the service. Based on details released by Westpac, Tap On Phone will not be available until early 2023. The move is a bid to counter competition from both Square and Apple.

When mobile card acceptance was first introduced by the likes of Square, it was not on the radar of major banks. Either the segment was too niche or the volume was too low to raise any interest from the biggest incumbent acquirers. However, Square has gradually established itself as a major player, thus eating into the share of Westpac.

Apple in Australia: 45% of smartphones run on iOS

Now the market faces a new threat from Apple, which announced its Tap to Pay mobile card acceptance service in February 2022. Set to launch later this year, Tap to Pay will be exclusive to iPhones, while no other mobile card acceptance service – including Westpac’s – will work on iPhones.

This is a problem given Apple’s strength in the Australian smartphone market. A study published by Australian Financial Review notes that over 45% of smartphones in Australia run on iOS, giving Apple a dominant position. As a result, Apple smartphone-owning merchants that rely on mobile card acceptance solutions will be forced to use Tap to Pay.

Although in theory Apple can use its hardware dominance to influence the payments market, doing so will undoubtedly attract the attention of regulators like the Australian Competition and Consumer Commission. Westpac and other leading acquirers will be pressing the commission to step in and open up the Apple ecosystem.

But unless something concrete is put in place to this effect, incumbents like Westpac will be pushed out of the iOS space. Westpac’s announcement of Tap on Phone is clearly intended to avoid losing further ground in the mobile card acceptance market to players such as Square. We expect other acquirers to follow suit in the future.

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Arnie Cho is senior analyst, APAC payments, GlobalData