Apple Pay growth will make it the next antitrust fight with regulators
Apple Pay use has grown significantly since the pandemic began, and regulators are taking note as antitrust probes have already begun.
Apple Pay will be Apple's next regulatory battle
Apple Pay works on all Apple products via biometrics or a password and can be used in apps and on the web. Between Apple Card and Apple Pay Cash, users are significantly motivated to utilize Apple's payment platform when using Apple devices.
The largest issue at hand is how Apple presents users with the payment system and how other payment products are minimized on its platform. The Wallet app cannot be deleted and payment apps cannot have access to the NFC chip on the iPhone. This means when the iPhone or Apple Watch is presented to a payment terminal, the Wallet app will always appear.
On top of those restrictions, Apple also has guidelines for developers that minimize other payment options. These guidelines range from "make the Apple Pay button larger" to "make Apple Pay appear separate from other options."
Regulatory pressure started in late 2019 as the EU opened an investigation into Apple Pay. Other regulatory bodies have taken interest since, especially due to the pandemic causing an explosion in contactless payment options.
A report from Financial Times says that Apple could leverage Apple Pay to make it earn even more than the App Store in the future.
Apple's head of Apple Pay, Jennifer Bailey, said that contactless payments have gone from "being a convenience to a matter of public health." Estimates from analyst group Loup Ventures show Apple Pay is used by at least 507 million people, up from 67 million in 2016.
Apple takes an estimated 0.15% fee per transaction, and analysts estimate that it would facilitate one in ten transactions worldwide by 2025.
Apple's stance on the matter is clear--the company believes if it opens up its NFC chip to other payment options it exposes users to security risks. Apple is also not the dominant mobile platform around the world, nor is its payment system. China is one of Apple's biggest markets, yet most of the people rely on WeChat Pay and Alipay.
Apple Pay will be Apple's next regulatory battle
Apple Pay works on all Apple products via biometrics or a password and can be used in apps and on the web. Between Apple Card and Apple Pay Cash, users are significantly motivated to utilize Apple's payment platform when using Apple devices.
The largest issue at hand is how Apple presents users with the payment system and how other payment products are minimized on its platform. The Wallet app cannot be deleted and payment apps cannot have access to the NFC chip on the iPhone. This means when the iPhone or Apple Watch is presented to a payment terminal, the Wallet app will always appear.
On top of those restrictions, Apple also has guidelines for developers that minimize other payment options. These guidelines range from "make the Apple Pay button larger" to "make Apple Pay appear separate from other options."
Regulatory pressure started in late 2019 as the EU opened an investigation into Apple Pay. Other regulatory bodies have taken interest since, especially due to the pandemic causing an explosion in contactless payment options.
A report from Financial Times says that Apple could leverage Apple Pay to make it earn even more than the App Store in the future.
Apple's head of Apple Pay, Jennifer Bailey, said that contactless payments have gone from "being a convenience to a matter of public health." Estimates from analyst group Loup Ventures show Apple Pay is used by at least 507 million people, up from 67 million in 2016.
Apple takes an estimated 0.15% fee per transaction, and analysts estimate that it would facilitate one in ten transactions worldwide by 2025.
Apple's stance on the matter is clear--the company believes if it opens up its NFC chip to other payment options it exposes users to security risks. Apple is also not the dominant mobile platform around the world, nor is its payment system. China is one of Apple's biggest markets, yet most of the people rely on WeChat Pay and Alipay.
Comments
I have never bought the claim that Apple is a monopoly within itself. That POS computer company Psystar claimed that Apple had a monopoly on Macs. That kind of thinking is about as stupid as it gets.
What about Google Pay on Android phones and Samsung Pay on Samsung phones?
Just because they ain’t as big as Apple Pay?
Regulatory are no longer about regulating but more of a political machine and monetary generating machine.
Clearly people can choose to pay with cash, check, or any credit card. And when using a credit card they may use any contactless system accepted by the merchant. The fact that most people who use a contactless system choose Apple Pay because offers the easiest to use and most secure solution does not transform it into a monopoly.
Plenty of other companies tried and failed to offer a competing product, and they failed not because Apple has a monopoly, but because their offerings sucked. For example:
https://www.forbes.com/sites/markrogowsky/2015/12/10/walmart-drops-an-atomic-bomb-on-its-applepay-competitor/?sh=7d265c3e26a4
It would be one thing if Apple's hardware had a monopoly, but it doesn't. But even then, there are still many other ways for people to make a payment. It is not Apple's fault that the banks in the US dragged their feet for so long in bringing contactless payments to the market. Other countries have had tap-to-pay for a decade now - no smartphone required.
All legal investigations need to start with allegations of harm -- somebody did something that harmed somebody else. It seems though that that principle has been abandoned in the chase to break down large corporations for no other purpose than to break down large corporations.
This is about Apple Pay being the only route to make phone based payments with on an iPhone's NFC hardware.
It's a completely different issue.
Samsung Pay, Huawei Pay, Google Pay, BBVA Pay etc are not the only options on the phones where they offered.
That means the 0.15% slice of the pie Apple is taking is reserved for itself, as 'competition' in this area doesn't exist on iPhones.
We'll see what the different investigations conclude in regards to the situation.
Note that the governments whining about this have no problem with the vampires that process payments for excessive fees. Nothing like getting tagged for $6 on an ATM transaction or the one used by my Gas and Electric Utility for online payments that charges like $2 to process an online bill payment.
I do not want 3rds party nonsense that compromises security on my devices and do not want to see Apple change the OS to enable such crap.
If they are so worried about anti-trust they can start by breaking up Disney, Comcast and AT&T.
It is to those looking for a piece of the action. To the rest of the world, not so much.
it isn’t anticompetitive in any way, as you point out there are other possible pathways.
They would still run through Apple's API's.
The system would function just like it does on Android phones. Secure enclave, TEE etc.
I haven't heard about security problems on those phones either.
Using Apple Pay would still be an option. Users would still be able to ignore the alternatives if they wanted to.
The problem from the investigation perspective is that Apple doesn't allow the alternatives to even exist.