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Apple sued over iPhone tap-to-pay monopoly

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A proposed class action lawsuit targets Apple Pay, alleging that Apple has an illegal monopoly on iPhone contactless payments, forcing card issuers to pay fees (through Bloomberg). The lawsuit is being filed by the Iowa-based Affinity Credit Union, which issues debit and credit cards compatible with Apple Pay, but the company’s lawyers hope to turn it into a class action case so other card issuers can join the lawsuit. can connect.

According to the complaint, which you can read in full below, Apple makes more than $1 billion a year charging credit card companies up to 0.15 percent per transaction in Apple Pay, yet those same card issuers don’t have to pay anything when their customers use “functionally identical Android wallets”. The lawsuit alleges that Apple is violating antitrust law by making Apple Pay the only service that can make NFC payments on its iPhones, iPads and Apple Watches. It also says Apple prevents card issuers from passing those fees on to customers, leaving iPhone owners with no incentive to look for a cheaper payment method.

As we discussed in detail during the Epic vs Apple lawsuit, a case like this may depend on what a judge decides the relevant market might be – here the plaintiffs say Apple has a monopoly on “Tap and Pay iOS mobile wallets”. But even if a judge agrees that this is true, they can still rule that there is no real monopoly, as customers can always switch to Android, where other mobile wallets exist.

Lawsuits don’t automatically get class action status – a judge has to decide whether or not to grant it. However, the law firm handling the case for Affinity, Hagens Berman, has a good track record of class action lawsuits against Apple; it was involved in getting a $100 million settlement from developers after they claimed the App Store rules were unfair, as well as the ebook price-fixing case that ended with about $400 million being refunded by Apple to customers.

The purpose of the lawsuit, according to a press release of the law firm, is to change Apple’s policy that ensures that all contactless payments are made through Apple Pay, and to have the company reimburse card issuers for fees the plaintiffs allege illegally charged.

This isn’t the only challenge Apple faces when running Apple Pay. The EU recently objected to third-party developers not being able to use the iPhone’s NFC system for payments, claiming the restrictions lead to “less innovation and less consumer choice for mobile wallets on iPhones”. Now the company could also enter a legal battle over the matter in the US.

Apple did not immediately respond The edgerequest for comment on the matter.

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