At least one bank is suing Apple claiming it exercises a monopoly over the iPhone's tap-to-pay...

Cal Jeffrey

Posts: 3,656   +1,122
Staff member
In context: Judging by the lawsuits alone, companies always saying that Apple "forces" it to pay a premium for something that would otherwise be cheaper or free were it not for its walled garden. Much of this noise comes from game and app developers, but now, banks are taking issue with Apple Pay's NFC system.

Apple could face a new antitrust lawsuit in the coming months. Bloomberg notes that Affinity Credit Union (ACU), out of Iowa, has hired representation to contest Apple's tap-to-pay system. Its lawyers are looking into whether they can create a class-action case of the complaint.

The plaintiff argues that Apple has created an illegal monopoly with the iPhone's near-field communication (NFC) payment system. Customers can add their ACU credit and debit cards to their iPhone wallets, but Apple charges fees for every purchase.

According to the filing, Apple charges up to 0.15 percent on every transaction. These charges make Apple approximately $1 billion per year. The plaintiff believes this is unfair since there are no fees associated with Android's similar wallet function. On the surface, it seems relatively frivolous — each company should be able to charge or not in fair competition.

However, ACU's attorneys argue that Apple forces credit card issuers to use Apple Pay, which exists outside of just a function of the wallet app. The legal team also claims that Apple's terms of service say that banks cannot pass Apple Pay fees to iPhone users. Thus iPhone customers have little to complain about or reason to look for a cheaper competing wallet app.

"When you compare the functionality of Apple Pay to mobile wallets available on Android devices — Google Pay, Samsung Pay — you're essentially holding up a mirror; they are essentially identical," said Steve Berman, Hagens Berman co-founder and managing partner, one of the two firms representing ACU. "And yet, the same service on Android that card issuers pay absolutely nothing for costs them a collective $1 billion annually through Apple Pay. The reason for this is simple. There is competition on Android devices, with multiple wallets offering contactless payments, whereas Apple has barred all rivals, making Apple Pay the only option."

The lawsuit is looking to force Apple into changing its NFC payment policies to open up competition on Apple devices to other wallet apps. It also wants the company to pay back card issuers the fees that it has "illegally" charged them. Although Hagens Berman would like to see the case moved to a class action, it is up to a judge to decide if the suit warrants a larger plaintiff pool.

Image credit: Mike Allan Pellin

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psycros

Posts: 4,448   +6,631
Your phone is the most likely thing to get stolen that you own. If you willingly give Google, Samsung or Apple your financial info you've just agreed to be spammed, scammed and have your identity stolen. Anyone who uses their phone to pay for stuff is bonkers.
 

bviktor

Posts: 1,042   +1,519
Dear banks! Will you PLEASE leave my phone the f*ck alone? No, I don't need your unreliable cr@p, Apple Pay works flawlessly, thank you.
 

Burty117

Posts: 4,600   +2,901
Anyone who uses their phone to pay for stuff is bonkers.
Oh I see, you seem to misunderstand or haven't been outside for a long time.

The plastic card you use to pay for things, they've put it in phones now, except it now requires you to authenticate with your face or fingerprint making it much more secure. They even put protection systems in-place from dodgy stores that try to copy your card details by randomising the card numbers every transaction.

The old plastic card you used to use did none of those things, once it was stolen, they could just use it and you'd have to call your bank to get it cancelled.
 

Uncle Al

Posts: 9,276   +8,440
Can't see paying for things this way unless your net worth is less than $1,000. Too many scams, bots, and hacks to ever trust it and glad to see Apple finally being sued for this practice.
 

kiwigraeme

Posts: 1,297   +950
Dear banks! Will you PLEASE leave my phone the f*ck alone? No, I don't need your unreliable cr@p, Apple Pay works flawlessly, thank you.

I think it's a bit more complicated until Apple becomes a bank or like Visa - then isn't Apple pay just a neat service you like . Does Apple provide protection over an above Visa and your bank ?

For that .15% fee I suppose Apple does provide a service - it assures the bank the user is legit
ahh too late at night and I know crap about Apple pay .
End of day I suppose it depends what Apples end game is - easy to change banks - how easy to change phones it they control your money , insurance, medical, memories , your car access, contacts etc etc etc

I do think Apple wants to imprison you for life - make a high dependency relationship - so much so that walking away will feel like a huge cost - no way I want to give a bunch of smarmy scheming suits that power over me .

Still makes me laugh when Apple Users smugly says of Google users "you are the product" - like Apple is not planning to strip mine them - that it does know all about you - that it's huge advertising income is not packaging you up to sell to highest bidders on it's terms .
I chose not to work as a corporate slave for same reason - oh look at my pay, my perks= oh yeah executive dining room , luxury showers , golf club membership , my pension plan - yeah I got better things to do than grind for a corp in my most productive years . Oh I stay at $500 a night resorts- some plonker informs you - that's nice sunshine
 

psycros

Posts: 4,448   +6,631
Oh I see, you seem to misunderstand or haven't been outside for a long time.

The plastic card you use to pay for things, they've put it in phones now, except it now requires you to authenticate with your face or fingerprint making it much more secure. They even put protection systems in-place from dodgy stores that try to copy your card details by randomising the card numbers every transaction.

The old plastic card you used to use did none of those things, once it was stolen, they could just use it and you'd have to call your bank to get it cancelled.

I've used Google Pay on a special account I created just to test it. At no point did it require my face or thumbprint. You hold it near the scanner and "bleep!" your account is charged. Try again.
 

Burty117

Posts: 4,600   +2,901
I've used Google Pay on a special account I created just to test it. At no point did it require my face or thumbprint. You hold it near the scanner and "bleep!" your account is charged. Try again.
Ah yes, sounds like a really thorough test. My point still stands, you seem to be under the illusion that plastic cards are safer than phones. That's just simply not true.

It's worth pointing out, you can set it so your phone has to be unlocked first before it works. I've also noticed recently with fuel prices skyrocketing, I cannot pay for more than £40 worth of goods without unlocking it first.

And another security piece you've neglected is card copying that usually happens in dodgy fuel stations. with a normal plastic card, the details of the card can be copied and used. With phones, they can still copy the details but the details are randomised for every transaction and are single use, so whatever they copied would never work again anyway, thus completely negating card copying fraud.
 

Raunchy

Posts: 55   +15
"The legal team also claims that Apple's terms of service say that banks cannot pass Apple Pay fees to iPhone users."

First, the Obama administration's banking-law reforms made this kind of prohibition illegal for credit-card companies; I don't see how Apple can get away with it. I hope this BS is challenged and defeated.

"There is competition on Android devices, with multiple wallets offering contactless payments, whereas Apple has barred all rivals, making Apple Pay the only option."

Then the answer is simple: DON'T ACCEPT APPLE PAY. A lot of places don't (or didn't) take American Express for the same reason; they were ripping merchants off. This suit is dumb, because it's claiming that there's no competition... yet they cited competition with Android. This is the time for merchants to take a stand against Apple.

This suit is akin to saying, "MasterCard is unfair because they're the only ones who can issue a MasterCard."