Apple accused of blocking third-party mobile wallets from using ‘Tap to Pay’ payment on iOS

On behalf of Affinity Credit Union and other participants, Hagens Berman and Sperling & Slater law firms have filed a class action lawsuit against Apple for violating the Sherman Act and Clayton Act by denying access to the new “Tap to Pay” payment service to third-party mobile wallets like Google Pay and Samsung Pay.

As per the complaint filed in the United States Northern District Court in California, Apple bars “would-be and free competitors from accessing the NFC interface needed to compete” and only permits the use of Apple Pay to make tap-to-pay transactions on iOS devices like iPhone, iPad, and Apple Watch.

Apple Pay

Apple sued for creating a monopoly in the market for Tap and Pay iOS Mobile Wallets for billions of dollar

The latest iPhone models are equipped with Near Field Communication (NFC) chip to make wireless and contactless payments through credit and debit cards saved in the Wallet app called Apple Pay.

In May this year, the tech giant introduced a new “Tap to Pay on iPhone” feature across stores in the United States which enables vendors to receive payments via their iPhones and removes the need for any additional hardware or payment terminal like Block Inc.’s Square.

Tap to Pay - Apple

Now, the plaintiffs have alleged that the Cupertino tech giant is forcefully creating a monopoly in the Tap-to-Pay iOS market to earn up to $4 billion from payment card issuers’ fees.

Having barred all competitors from its devices, Apple charges payment card issuers
fees that no other mobile wallet ventures to impose. Whenever an Apple Pay transaction is completed on a U.S. issuer’s payment card, the issuer must pay Apple a fee—15 basis points on credit (.15%) and a flat 0.5 cents ($0.005) on debit. These fees generated a reported $1 billion for Apple in 2019, and this revenue stream earned from card issuers—is predicted to quadruple by 2023.

The plaintiff is seeking the court to pass an injunction against Apple’s anticompetitive practices and pay damages.

apple - Tap to Pay

The Cupertino tech giant is also facing similar charges in Europe. The EU Commission has officially charged Apple for “unfairly” restricting access of Apple Pay on iPhone to third-party payment service providers and breaking EU law.

In its Statement of Objections sent to Apple, the EU states that the tech giant has abused its dominant position in markets for mobile wallets on iOS devices by “limiting access to a standard technology used for contactless payments with mobile devices in stores (‘Near-Field Communication (NFC)’ or ‘tap and go’), Apple restricts competition in the mobile wallets market on iOS” to benefit Apple Pay service. As the tech giant’s conduct goes against EU competition rules, the antitrust body has launched a formal antitrust investigation.

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Addicted to social media and in love with iPhone, started blogging as a hobby. And now it's my passion for every day is a new learning experience. Hopefully, manufacturers will continue to use innovative solutions and we will keep on letting you know about them.

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