EU Action Could Make Apple Pay More Useful

More options for users could be on the way

Key Takeaways

  • EU regulators are taking a hard look at Apple’s payment practices.
  • Apple allegedly refuses to allow rivals access to the NFC Apple Pay system.
  • Regulators around the world are increasing their scrutiny of possible monopolistic practices against tech giants.
Man checking in by scanning QR code on phone

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A recent move by European regulators against Apple eventually could allow more payment options for users, experts say. 

EU antitrust regulators reportedly are set to charge Apple with anti-competitive practices regarding Apple Pay and the NFC chip inside iPhones, which enables tap-and-go payments. The company allegedly refuses to allow rivals access to the payment system.

"Allowing access to the NFC functionality via an open API would mean third-party payment services could have the same or similar functionality as Apple Pay without direct control or fees dictated by Apple," Sean O'Brien, a visiting fellow at the Information Society Project at Yale Law School, told Lifewire in an email interview. 

Tap to Pay

Antitrust officials are narrowing in on the technology, which allows tap-to-pay on Apple devices as part of a broader look at the company’s practices. 

Google Android allows for some third-party integration into its payment system, but Apple locks the use of NFC to its own Apple Pay solution, Florian Ederer, a professor of economics at the Yale School of Management, told Lifewire in an email interview. "This means that third-party payment providers cannot operate on iPhones," he added.

If EU regulators have their way, Apple could be forced to allow developers to build features that will enable users to be able to pay anywhere that tap-to-pay is supported, not just Apple Pay terminals, Nico Ramirez, the CEO of software company Verilink, which uses Apple’s NFC system, told Lifewire in an email interview.

"At the very least, I expect Apple to face stronger regulation on so-called anti-steering provisions..."

"For users, this means that they will be able to use non-Apple Pay applications such as ones that emulate Visa or Mastercard," he added. 

The EU competition enforcer is currently preparing a statement of objections, but it probably will not be sent to Apple until next year, Ederer said. 

"This will likely be considered anti-competitive because Apple effectively uses its dominance as a mobile platform to favor its own payment solution, thereby creating an unlevel playing field with other payment systems," he added.

Tech on Trial

Regulators around the world are increasing their scrutiny of possible monopolistic practices against tech giants. 

Apple Pay has faced increasing scrutiny in the past. In August, South Korea passed a bill that prevents big app store operators, including Apple, from making software developers use their payment systems. In 2019, Germany passed legislation that forced Apple to open its mobile payments system to rivals. 

But in the United States, at least, Apple has prevailed in recent court decisions. In September, a federal judge decided not to describe Apple as a monopoly or require it to allow competing software app stores.

"The regulatory environment in the EU has been more stringent, and I think US regulators are much less likely to label Apple as a monopolist, especially since it's a global brand that is now as strong a symbol of America as, well, apple pie," O’Brien said. 

However, Apple still faces many antitrust lawsuits and complaints. In many of these cases, the alleged anticompetitive behavior derives from its iOS platform, which Apple is accused of leveraging to distort competition in markets such as music streaming services, in-app purchasing payment systems for games, and NFC payment systems. 

Person scanning Apple Watch to get through a subway

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"At the very least, I expect Apple to face stronger regulation on so-called anti-steering provisions, which limit the ability of developers to inform users of alternative purchasing options," Ederer said. 

Apple is likely to face many more regulations regarding the App Store and its openness, Ramirez said. By comparison, Android users are easily able to "sideload" apps by installing the APK file.

"iOS users have to jump through many hoops that make it essentially impossible for any non-developer to load apps that haven't gone through Apple's arbitrary review process," he added. "Users will benefit from this by being able to install pretty much anything they want at a slightly higher risk of installing malware."

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