UK Class Action Alleges Apple Pay Monopolizes iPhone Contactless Payments, Inflating Consumer Costs
A significant class action lawsuit has been initiated in the United Kingdom, accusing Apple Inc. of monopolizing the contactless payment market on iPhones through its Apple Pay service. The claim asserts that Apple’s restrictive practices have stifled competition, leading to hidden costs being passed on to millions of consumers. The lawsuit seeks up to £1.5 billion in damages on behalf of approximately 50 million UK consumers.
Allegations Against Apple Pay
Since its UK launch in 2015, Apple Pay has been the predominant contactless payment method for iPhone users. The lawsuit contends that Apple has maintained exclusive control over the iPhone’s Near-Field Communication (NFC) technology and the Secure Element, essential components for tap-to-pay transactions. This control allegedly prevents rival wallet applications from competing effectively with Apple Pay.
Consequently, banks and card issuers have been compelled to adopt Apple Pay to offer contactless payment services to iPhone users. The claim highlights that Apple charges these financial institutions a fee, reportedly around 0.15% per transaction in the UK, a practice considered atypical within the industry.
The lawsuit further alleges that these additional costs have been transferred to consumers through increased charges on various banking products, including current accounts, credit cards, savings accounts, and mortgages. Given that approximately 98% of UK consumers use banks supporting Apple Pay, the claim suggests that nearly everyone has been affected financially, regardless of whether they use an iPhone.
If the lawsuit is successful, individual compensation could range between £26 and £35 per person.
Initiator of the Lawsuit
The legal action is spearheaded by James Daley, founder of the consumer advocacy group Fairer Finance. Daley argues that Apple’s dominance over Apple Pay has created an inequitable system, escalating costs throughout the banking sector.
People will have no idea they’ve been paying more for everyday banking because of the way Apple has operated Apple Pay. By shutting out competition and charging hidden fees, Apple has pushed up costs for millions of consumers. Shockingly, this doesn’t just affect Apple Pay users or iPhone owners. Banks have passed these costs on to all customers, meaning everyone is paying the price, Daley stated.
He emphasized that the lawsuit aims not only to recover funds for consumers but also to hold Apple accountable for what he describes as anti-competitive behavior.
Apple’s Response
Apple has dismissed the allegations, asserting that the case lacks merit and should not proceed.
Apple Pay is a seamless and secure way for users to make contactless payments, and one of many payment options available to consumers. Apple does not charge fees to consumers or merchants for using Apple Pay, and banks see meaningful benefits from offering Apple Pay to their customers, most notably fraud reduction, the company stated.
Apple also pointed to recent regulatory changes in the UK that permit third-party developers to access NFC and Secure Element functionalities in their applications for contactless payments.
Legal Proceedings
The lawsuit is currently under review by the Competition Appeal Tribunal, which will determine whether the claim can advance as a collective action. If approved, this case would represent a landmark legal examination in the UK of Apple’s management of Apple Pay and its adherence to competition laws.
Broader Context
This lawsuit is part of a series of legal challenges Apple has faced concerning its business practices. For instance, in 2023, the European Commission issued a statement of objections to Apple, alleging that the company restricted competition in the mobile wallets market on iOS devices by limiting access to NFC technology. The Commission’s preliminary view was that Apple may have abused its dominant position, potentially violating EU competition rules.
Additionally, in 2024, a UK tribunal found that Apple had abused its market position by imposing excessive fees on app developers through its App Store, leading to an estimated £1.5 billion in consumer harm. Apple has appealed this ruling, maintaining that its App Store practices are fair and beneficial to both developers and consumers.
These cases underscore the growing scrutiny of Apple’s business practices globally, particularly concerning its control over essential technologies and platforms. The outcomes of these legal battles could have significant implications for the company’s operations and the broader tech industry.
