UPDATE 1-Australia banks agree Android Pay deal, Apple Pay still frozen out

Wed Dec 16, 2015 12:27am EST
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* Android Pay set for Australia launch in first-half 2016

* Apple Pay already launched, still no deal with big banks

* Australia banks strong in developed mobile payment market

* Apple, banks fail to agree so far on fees - sources (Recasts, adds analysts' comment)

By Swati Pandey

SYDNEY, Dec 16 (Reuters) - Big Australian banks have agreed to accept payments made on mobile devices using Google Inc's Android Pay, leaving Apple Inc's rival Apple Pay system out in the cold as the tech giant struggles to coax lenders to accept its terms.

Banks including Westpac Banking Corp, ANZ Banking Group and Macquarie will accept contactless payments via Android smartphones when Google rolls out the service in first-half 2016, the tech giant said on Wednesday. Westpac and Commonwealth Bank of Australia already operate their own mobile payment systems.

In contrast, Apple remains locked in talks with big banks in search of a deal to accept Apple Pay. The iPhone maker's system launched in Australia last month, with support for American Express Co cards, but remains adrift from 80 percent of consumers using other credit cards in a market Westpac sees as worth more than $2 billion this year.

"It's a big bargaining chip for (Australian) banks to use to force a better deal with Apple," said Foad Fadaghi, managing director of technology research firm Telsyte.   Continued...