UK Class Action Alleges Apple Pay Stifles Competition and Inflates Consumer Costs
A recent class action lawsuit filed in the United Kingdom accuses Apple Inc. of monopolizing the contactless payment market on iPhones through its Apple Pay service, allegedly leading to increased costs for millions of consumers. The claim asserts that Apple’s restrictive practices have hindered competition and imposed hidden fees on banking services, culminating in a demand for up to £1.5 billion in damages on behalf of approximately 50 million UK consumers.
Allegations of Anti-Competitive Behavior
The lawsuit contends that since the introduction of Apple Pay in 2015, Apple has maintained exclusive control over the iPhone’s near-field communication (NFC) technology and the Secure Element, essential components for facilitating tap-to-pay transactions. This control purportedly prevented rival wallet applications from offering similar contactless payment services on iOS devices, effectively granting Apple a monopoly in this sector.
Consequently, financial institutions and card issuers found themselves compelled to adopt Apple Pay to provide contactless payment options to their customers. The claim highlights that Apple imposed transaction fees on these banks, reportedly around 0.15% per transaction in the UK, a practice deemed atypical within the industry. These additional costs were allegedly 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 are clients of banks supporting Apple Pay, the lawsuit suggests that the majority of the population has been affected, irrespective of their personal use of Apple Pay or ownership of an iPhone.
Should the lawsuit succeed, individual compensation is estimated to range between £26 and £35 per person.
Initiation of the Legal Action
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 fostered an inequitable system, escalating costs throughout the banking industry.
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.
The objective of the lawsuit is not only to secure financial restitution for consumers but also to hold Apple accountable for what is perceived as anti-competitive conduct.
Apple’s Rebuttal
Apple has dismissed the allegations, asserting that the lawsuit 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 responded.
Apple also referenced recent regulatory changes in the UK that permit third-party developers to access NFC and Secure Element functionalities in their applications for contactless payments, suggesting that the market is open to competition.
Legal Proceedings and Implications
The case is currently under review by the Competition Appeal Tribunal, which will determine whether the claim qualifies as a collective action. If approved, this lawsuit would represent a significant legal examination of Apple’s management of Apple Pay and its adherence to competition laws within the UK.
This legal challenge is part of a broader pattern of scrutiny faced by Apple regarding its business practices. Similar allegations have emerged in other jurisdictions, questioning the company’s control over its platforms and the potential suppression of competition. The outcome of this case could have far-reaching implications for Apple’s operations and the regulatory landscape governing digital payment systems.
