UK opens probe into risks of using Apple Wallet and rivals
A pair of UK regulatory bodies have launched a joint and all-encompassing investigation into digital wallets, including Apple Wallet, concerning fees, anti-competitive actions, and harm if they stop working.
Apple Wallet and Apple Pay are to be investigated by the UK
The UK officially split from the European Union years ago, but it is still copying its legislation, and now, under a new government, it is also looking into topics the EU has already settled. In this case, it has to do with issues around Apple Wallet, where the EU recently accepted Apple's offer of opening up its technology to rivals in the region.
According to Bloomberg, both the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) have begun what's being described as a fact-finding mission. As well as Apple Wallet and Apple Pay, the regulators are examining Google and PayPal.
"We want to make sure we can maximize the opportunities and benefits for consumers, and businesses," said FCA CEO Nikhil Rathi, "while protecting against any risks this technology may present."
By risks, the regulators specifically mean what issues would arise if such digital wallets systems were to go down, even briefly. These regulators are approaching industry participants with a series of questions concerning that, and also what fees these digital wallets firms are charging.
"Digital wallets are steadily becoming a go-to payment type," said David Geale, the managing director of the PSR. "While this presents exciting opportunities, there might be risks too."
The two regulators have also said that they are interested in how digital wallets could reduce reliance on the Visa and Mastercard networks. Digital wallets have at least the potential to let users pay money to merchants directly from their bank accounts instead of going through a card network that imposes fees.
Reportedly, the regulators believe that it is likely that more than half of the UK's adult population uses a digital wallet, to at least some extent. They claim that around 14% of point-of-sale transactions and 38% of online e-commerce transactions involved one digital wallet or another.
The FCA and PSR investigation would appear to cross into the territory that comes under the aegis of the UK's Competition and Markets Authority (CMA). The two regulators have reportedly promised to provide the CMA with their findings.
It's not known who precisely the regulators are talking to about the industry. However, they have set a deadline for responses of September 13, 2024.
In the EU's similar investigation, Apple was ultimately forced into making compromises and specifically to no longer limit its iPhone NFC technology to its own Apple Pay. This is a result of the EU's Digital Markets Act that requires Big Tech firms to be more open to competition, or face fines.
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Comments
Public servants are not legislators. Politicians are legislators as part of the legislative branch.
Public servants working in agencies have the role of enforcing those laws under order from government as part of the executive branch.
These agencies are right. Digital wallets hold the potential to bypass Visa and MasterCard allowing for real competition and for reducing transaction costs to the benefit of everyone. Consumers, shops, and banks could all win from direct connections.
That is not in the interest of Apple. Our friends in Cupertino are actively siphoning fees from ApplePay and levying an Apple Tax on shops, restaurants etc. This is possible by working with MasterCard and Visa. It is Apple being a gatekeeper and limiting innovation to protect income from ApplePay on devices we own. The business model is "you can only use <component> if we get to tax someone per use and only with partners we allow".
Would you be happy if AT&T wouldn't allow some services unless they partnered with AT&T? That already happened and got stopped.