Lawsuit Alleges Antitrust Issues Over Apple Pay

Apple has been sued by a US payment card issuer, who alleging the tech giant is abusing its domination of the mobile device sector.

Reuters reported that the proposed class action was filed on Monday in a San Francisco federal court, alleging Apple is thwarting competition for its Apple Pay mobile wallet.

This is not the only trouble Apple is facing on this front. In May the European Commission informed Apple of its preliminary finding that the iPhone giant unfairly restricted contactless NFC tech in iPhones to benefit of the Apple Pay payment system.

Apple Pay

The EC probe could lead to heavy fines for the tech giant and force it to open up its mobile payment system to competitors, such as banks.

The European Commission had begun an in-depth probe into the company’s Apple Pay payment technology back in June 2020.

Last September the head of the Commonwealth Bank of Australia accused Apple of anticompetitive behaviour over its control of payments on its phones.

Matt Comyn, chief executive at the Sydney-based Commonwealth Bank of Australia called on Aussie lawmakers to boost scrutiny of technology giants, pointing to payments through digital wallets developed by Apple and Alphabet’s Google, and the fees charged by Apple in particular.

Apple had introduced Apple Pay to the world back in 2014, and it essentially digitises and replaces a credit or debit card chip and PIN transaction at a contactless-capable point-of-sale terminal.

Now according to Reuters, the lawsuit from Iowa-based Affinity Credit Union, alleges that Apple “coerces” consumers who use its smartphones, smart watches and tablets into using its own wallet for contactless payments, unlike makers of Android-based devices that let consumers choose wallets such as Google Pay and Samsung Pay.

The plaintiff alleged Apple’s anticompetitive conduct forces the more than 4,000 banks and credit unions that use Apple Pay to pay at least $1 billion of excess fees annually for the privilege.

It also alleged that Apple’s conduct minimises the incentive for it to make Apple Pay work better and make it more resistant to security breaches.

“Apple’s conduct harms not only issuers, but also consumers and competition as a whole,” the complaint said.

The lawsuit seeks unspecified triple damages, and a halt to Apple’s alleged anticompetitive conduct.

Apple did not immediately respond to requests for comment.

Apple Pay charges

The complaint alleges that Apple makes over $1 billion a year charging credit card companies up to 0.15 percent per transaction in Apple Pay fees.

However those same card issuers don’t have to pay anything when their customers use “functionally identical Android wallets.”

Apple has run into trouble before over charges concerning its ecosystem.

For example many developers have been unhappy with the 30 percent commission Apple exacts from digital purchases.

Indeed, in June 2019, Apple was hit with a lawsuit in the US from two app developers, who alleged that the App store gives the iPad maker a monopoly on the sale and distribution of iOS apps.

A more high profile battle between Apple and Epic Games was only resolved in September 2021, when Judge Yvonne Gonzalez Rogers effectively ruled in Apple’s favour.

The judge ruled in favour of Apple in nine of the ten claims Epic brought against the company.

However there was one ruling that did not go Apple’s way, when the judge found that Apple had violated California’s anti-steering rules.

She ordered Apple to make a major change to its App Store, for the first time allowing developers to send their users to alternative payment systems.