Dual-Network Cards and Mobile Wallet Technology 1. Introduction

Mobile card payments are payments that are made using an electronic representation of a payment card in a mobile phone or other device, as opposed to using the traditional ‘plastic’ form factor. The electronic representation of the card is contained in a ‘mobile wallet’ – an ‘app’ provided either by the cardholder's financial institution or by a third-party mobile wallet provider. Mobile wallets may also contain electronic representations of other cards and credentials that are typically found in traditional physical wallets.

There is currently significant commercial activity in the mobile payments sphere in Australia involving financial institutions, card schemes and third-party mobile wallet providers. Almost all Australian card-issuing financial institutions have mobile banking apps and in many cases these issuer apps or wallets allow cardholders to make mobile payments using the near-field communication (NFC) or quick response (QR) code functionality of mobile devices to communicate with payment terminals.[1] There are also currently three large third-party mobile wallet providers – Apple Pay, Android Pay and Samsung Pay – which allow mobile payments for customers of particular banks and via particular networks. Mobile payments have so far only been possible via the networks of the international schemes (American Express, MasterCard and Visa). However, eftpos Australia, the domestic debit scheme, is working with issuers and mobile wallet providers and has announced that it expects to launch eftpos as a payment option in mobile wallets in 2017.

Many observers expect that mobile payments will grow very rapidly in coming years. Contactless terminals are now ubiquitous, smartphone penetration is very high and banks as well as the global third-party wallet providers are actively promoting mobile payments. In addition, the use of mobile wallets more generally is likely to accelerate due to various related initiatives that are under way. For example, Transport for NSW is looking to allow customers to use their contactless cards or mobile phones as ‘open loop’ alternatives to the Opal card, while various government entities are looking to issue licences and other credentials on mobile phones.

Against the background of intense interest in mobile payments, some stakeholders have recently raised concerns about possible restrictions on competition in this sphere. This consultation paper deals with some issues that have a bearing on competition between payment networks that are enabled on existing dual-network cards issued by Australian financial institutions (see Box A for an outline of the different entities involved in mobile payments). The paper does not cover the current dispute between some card issuers and third-party mobile wallet providers – this is a separate issue that is being addressed by the ACCC.[2]

Box A: The entities in mobile payments

There are a number of different types of entities involved in providing mobile payment services to households. The relevant entities for this paper include:

  • Card issuers: These are typically banks, credit unions and building societies which provide their customers with debit or credit cards that enable payments through different card networks. American Express is also a card issuer.
  • Card schemes or networks: These include entities such as eftpos Australia, MasterCard, Visa and American Express which provide services such as processing and authorisation of transactions as well as a set of rules that bind participating card issuers and card acquirers (entities which provide card acceptance services to merchants).
  • Third-party mobile wallet providers: These are entities such as handset manufacturers, mobile carriers or independent developers which provide mobile wallets that enable payments through a wide range of banks and schemes and may hold other credentials. The major providers include Apple Pay, Samsung Pay and Android Pay.
  • Token service providers (TSPs): These provide services associated with tokenisation (described below) which enhances the security of card transactions in the mobile or on-line context. The four card schemes referred to above have all established their own TSPs and transactions going through the network of each of those schemes will typically use the relevant scheme's TSP.


A QR code is a two-dimensional barcode consisting of black squares arranged in a square grid on a white background. It contains information that can be recognised by the cameras on smartphones and other devices. [1]

On 29 November, the ACCC announced a draft determination proposing to deny authorisation to the applicant financial institutions. See http://registers.accc.gov.au/content/index.phtml/itemId/1197444/fromItemId/278039. [2]