Apple, Visa, Mastercard face lawsuit over high merchant fees
Apple has been named in a proposed class-action lawsuit alongside Mastercard and Visa, over claims of conspiracy to cut competition and make merchants pay higher fees for credit and debit card transactions.

Apple Pay
Filed on Thursday at the East St. Louis, Illinois Federal Court, merchant Mirage Wine & Spirits alleges that Apple made agreements with Visa and Mastercard to not compete against the two incumbent credit card firms.
According to the complaint reported by Reuters, the deal allegedly had Visa and Mastercard pay Apple part of the transaction fees for any purchases performed by consumers on their networks that used Apple's "Mobile Wallet service," namely Apple Pay. This was deemed in the complaint to be a "very large and ongoing cash bribe" valued at hundreds of millions of dollars per year.
Since there's no competition between the three companies in the complaint, there's therefore no reason for any of the firms involved to work to improve their services and gain more custom, such as by reducing the fees merchants pay for card transactions. The supposed deal therefore didn't help merchants that relied on the network, but instead cost them more money in fees.
It is thought that, if there wasn't a market-allocation agreement, Apple or a third party would've entered the market and placed "downward pressure on the Entrenched Networks' fees."
The lawsuit doesn't just go after fee arrangements but also tackles Apple's hardware as well. It is alleged that, under the agreement with Visa and Mastercard, Apple would "protect their market division from competition by blocking third parties from accessing certain hardware in the iPhone."
Apple had, in the complaint, allegedly agreed to not allow third-party payment applications to "reside in the Apple Pay Mobile Wallet or use the NFC hardware" installed on items like the iPhone.
If the agreement didn't exist, Apple would've had more incentive to effectively manage its own payment network, with the Apple Wallet funded with bank transfers and merchant fees that were still "highly profitable to Apple" but also "significantly below" those of Visa and Mastercard.
There would've also been an incentive to open up NFC functionality to third-party apps, the complaint adds.
The lawsuit is seeking a class action status, and is brought on behalf of a proposed class of "at least many thousands" of merchants. It also seeks triple damages under U.S. antitrust law.
Apple has yet to officially comment on the lawsuit.
While the lawsuit may take a while to come to fruition, Apple may still open up NFC access. On December 12, it was reported Apple is considering offering to open up NFC on the iPhone to other payment services, to fend off antitrust regulatory trouble in the European Union.
Read on AppleInsider
Comments
https://appleinsider.com/articles/23/09/28/apple-pay-antitrust-lawsuit-accuses-apple-of-coercing-consumers-excessive-fees
This is what pays for things like daily cash, and cash back, and all those perks.
What I do see is a resurgence of merchants adding credit card fees, and they are excessive. 3% credit card fees are now common, and there is no way any but the smallest of merchants are charged that much. One of the more entertaining (?) instances of this is at the Ford delarship where I was changed a 3% credit card fee at the service department that was not disclosed until after the service work was completed. I asked if this fee would still apply to the "Ford Rewards" credit card, their own branded "FordPass Rewards" Visa card - and it does. So...if you get their "rewards" card, you give it right back to them at the PoS. Nice.
To put this in the simplest terms, there are four parties involved in a credit card transaction: the customer, the customer’s issuing bank, the merchant, and the merchant’s bank. Amex and Diner’s Club do things a little differently, since they aren’t issued by the customer’s bank, but the idea is the same.
The merchant is supposed to “mark up” the price of the items to cover their base cost, the cost of doing business, and allow for profit. So Apple’s “slice” of this entire transaction should already be covered as part of the fee the merchant’s bank charges the merchant, i.e. part of the cost of doing business.
For EU: https://www.ecb.europa.eu/pub/pdf/scpops/ecb.op294~8ac480631a.en.pdf (Table 11).
Cards are still way cheaper than cash in handling. IMHO shops should have the right to charge for any payment option (cash included) to the customer. The choice is with the customer. If a customer want to pay 5% for paying by cash or 3% for American Express... then fine - but right now those paying with debit cards or Visa are taking the bill for other customers.
Merchants are adding these fees. Thing is they are adding way more than what they are actually charged. And handling cash is indeed expensive...and difficult to quantify. I don't see people believing that it is an actual cost, and trying to do so would be troublesome. These are really overhead costs, but merchants are learning to add fees to collect more by claiming "someone else made them do it." Ive seen restaurants not only add a tip option at the PoS (for things where no service is rendered) but a "government required payroll fee." Folks, there is a minimum wage law because if there wasn't, they'd pay less.
2) I'd wager that using Apple Pay over a physical card has led to a savings for the merchant bank that far outweighs what they agree to pay Apple.
Off Topic: I have two cards that send me a physical letter in the mail when Apple Pay is set up on a device. I hate the waste of paper and the stamp for what would suffice in an email.
But all these parties have given themselves lots of wiggle room, based on nuance ("Surcharge," "Cash discount," "Convenience fee" and so on…), including the government, where paying by card can involve an additional fee. It also varies by state law.
I would like to see competition on payments, and I don't like paying part of the bill for those having expensive cards.Yes, shops will try to inflate the cost, and so they should always offer one "0%" option. Could be their own card or a debit card or... but taking 2-3% on every transaction is a rather heavy tax. It could be 0,35%. As this is "after tax" money the difference to consumers is real.
Since a merchant should be able to adjust a price to cover their costs I'm not opposed to them accounting for a merchant fee, but I can tell you that I have chosen not to business because of a fee added to a CC purchase. If it was the standard price with a small rebate for cash (or other non-CC/DC payments) I'm more fine with that which makes this more psychological than anything else.
I do have some large purchases each year that require my checking and routing number online that can also be had with a 3% CC/DC transaction fee. I do the virtual check for an ACH payment because I don't want the fee even if I hate using those accounts online like that — but I have the option to use a very specific checking account for such purchases so I put the money in as needed and have it set that it will not permit the account to be overdrawn to minimize the potential issue for my accounts to be stolen.
I think we'll eventually have the merchant fees included everywhere as standard as cash continues to be less popular.
As you correctly point out, local governments are also getting on the gravy train with these alleged fees they are charged. Funny how local governments don't seem to pass along the savings they enjoy (like exemption from sales/use tax) to their constituents (or as they sometime try to call us their "customers)) but they claim they are being charged 3% from some credit card company for a service that can only be obtained via their (usually god-awful) web portal.
There are indeed many cultural differences as you note. Even some regional ones here in the States. Interestingly, one of the first non-cash industries is airlines. Sorta makes sense, as imagine the cost of handling cash in all the various currencies offered.
Fun fact: Cardholders who pay off their balance every month are referred to internally by the card companies as "deadbeats".