Lawsuit alleges antitrust issues over Apple Pay

Payment card issuer accuses Apple of abusing its market dominance to thwart competition for its Apple Pay mobile wallet

Apple has been sued by a US payment card issuer, which alleges that the tech giant is abusing its dominance in the mobile device sector.

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

This is not the only problem Apple faces in this area. In May, the European Commission notified Apple of its preliminary finding that the iPhone giant was unfairly restricting contactless NFC technology in iPhones to take advantage of the Apple Pay payment system.

Apple Pay

The EC investigation could result in hefty fines for the tech giant and forcing it to open up its mobile payment system to competitors, such as banks.

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

Last September, the head of the Commonwealth Bank of Australia accused Apple of anti-competitive behavior in controlling payments on his phones.

Matt Comyn, chief executive at Sydney-based Commonwealth Bank of Australia called on Australian lawmakers to strengthen scrutiny of tech giants, pointing to payments through digital wallets developed by Alphabet’s Apple and Google, and the fees charged by Apple in the be taken into account in particular.

Apple had introduced Apple Pay to the world in 2014 and it essentially digitizes and replaces a credit or debit card and debit card transaction at a contactless payment terminal.

Now, according to Reuters, the lawsuit from the Iowa-based Affinity Credit Unionclaims that Apple is “forcing” consumers who use its smartphones, smartwatches and tablets to use its own wallet for contactless payments, unlike makers of Android-based devices who let consumers choose wallets such as Google Pay and Samsung Pay.

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

It also claimed that Apple’s behavior minimizes the incentive for Apple to make Apple Pay work better and make it more resilient to security breaches.

“Apple’s behavior hurts not only publishers, but consumers and competition as a whole,” the complaint said.

The lawsuit seeks unspecified triple damages and an end to Apple’s alleged anti-competitive behavior.

Apple did not immediately respond to requests for comment.

Apple Pay Fees

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

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

Apple has been in trouble before due to costs related to its ecosystem.

For example, many developers were unhappy with Apple’s 30 percent commission on digital purchases.

Indeed, in June 2019, Apple was hit by a lawsuit in the US by 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 notable battle between Apple and Epic Games was not settled until September 2021, when Judge Yvonne Gonzalez Rogers effectively ruled in Apple’s favour.

The judge ruled in favor of Apple in nine of the ten claims Epic filed against the company.

However, there was one ruling that was not in Apple’s favour, when the judge ruled that Apple had violated California’s anti-driving rules.

She instructed Apple to make a major change to the App Store that would allow developers to direct their users to alternative payment systems for the first time.