Home news Why Apple Is Getting Sued For Apple Pay

Why Apple Is Getting Sued For Apple Pay

by George Mensah

Apple is being sued for stifling competition and violating antitrust laws with its Apple Pay wallet, specifically the tap-to-pay contactless payment functionality it provides (via HBSSLaw). The lawsuit, filed in the United States District Court for the Northern District of California, accuses Apple of violating the Sherman Act and seeks class-action status as well as unspecified damages.

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The main point here is that Apple Pay is the only wallet service that enables users to make contactless payments via the onboard NFC chip. Competing services, such as Google Pay, are unable to provide the same tap-to-pay convenience on Apple’s devices, limiting them to Android users. That Apple Pay exclusivity applies to all compatible Apple hardware — iPhone, iPad, and Apple Watch — and each is a market leader in its own segment.

The lawsuit claims that Apple “illegally monopolizes the tap and pay iOS mobile wallets market.” Google, on the other hand, does not restrict third-party access to the NFC chip on phones running its Android operating system. As a result, competitors such as Samsung Pay can offer contactless payments on Android phones but not on iPhones. Apple claims that restricting its devices to Apple Pay is for security reasons.

More antitrust Apple woes

This isn’t the first time Apple has faced antitrust scrutiny because of Apple Pay. Executive Vice-President Margrethe Vestager stated in an official statement outlining the European Commission’s preliminary view of a similar lawsuit that “Apple may have limited competition in order to benefit its own solution, Apple Pay. If confirmed, such behavior would be prohibited by our competition rules.”

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Returning to Apple’s latest legal squabble, the lawsuit filed on behalf of Affinity Credit Union also highlights how Apple charges card issuers a fee for each Apple Pay transaction. Apple charges a fee of 0.15 percent of the net value for credit card payments and a flat fee of 0.5 cents for debit card transactions. Card issuers are not required to pay any fees when using an Android wallet app to make payments. According to reports, Apple made nearly $1 billion from these fees in 2019, with the figure expected to rise to $4 billion by 2023.


Furthermore, Affinity Credit Union claims that Apple’s policies prevent card issuers from passing on the cost of the fee to customers. Notably, the entity dragging Apple to court over Apple Pay is Hagens Berman and Sperling & Slater (via BusinessWire), a law firm that forced Apple to pay hundreds of millions of dollars after defeating the company in court over an ebook price fixing controversy and another matter involving App Store policies that allegedly harm developers.

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