New banking app will let users pay before they even get a plastic card

Australia is slowly going cashless, but is it also ready to go "cardless"?

An app to be released later this year by the National Australia Bank (NAB) will allow newly approved Visa credit cards to be used through the app before a plastic card even arrives. For payments under A$100, customers will be able to make contactless mobile transactions without ever having a card in their wallet.

"NAB is absolutely focussed on improving the customer experience, and our new App will give customers more control of their cards so it better suits their individual needs," Angus Gilfillan, executive general manager of consumer lending at NAB, said in a statement.

NAB has been collaborating with Visa since 2015 to find new ways of offering its services online. Through the app, bank customers will also be able to control how their cards are used. "If you've provided a secondary card to a family member, you can choose 'Don't Allow' for online purchases on that card," Gilfillan added.

A pilot run of the app on Android will begin shortly.

As it promotes its own banking app, NAB is at loggerheads with another mobile payments provider, Apple Pay. Alongside the Commonwealth Bank of Australia and Westpac, NAB is part of an attempt to force Apple to open up its iPhone hardware so the banks can fully integrate their own apps.

The banks have said they're upset Apple won't let them access the smartphone's near-field communication (NFC) technology that facilitates contactless payments. Banks like NAB have had to get around this roadblock with things like the PayTag sticker, to be launched this week, which can be placed on the back of an iPhone to allow such transactions.

The banks have applied to the Australian Competition and Consumer Commission (ACCC) to allow them to negotiate collectively with Apple.

Apple has pushed back strongly, claiming that giving the banks access to the phone's hardware would compromise the product's high level of security. In Australia, Apple Pay is currently only available to ANZ and American Express customers.

Apple also accused the banks of resisting "serious engagement with Apple" when it came to negotiating Apple Pay terms.

"Apple is concerned that the applicant banks may attempt to use collective bargaining/boycott to blunt Apple Pay precisely because they want to control the direction and pace of innovation and advantage their own mobile wallets," the tech company said in its submission to the ACCC.

In August, the ACCC said it needed more time to assess the banks' application.