To end a long-running competition review, the European Union has agreed to what Apple said about how it runs Apple Pay. In a news conference Thursday, Commission EVP Margrethe Vestager, who is in charge of the EU’s competition division, talked about the change.
She said that Apple has until July 25 to make changes that will let makers of competing mobile wallets offer contactless payment using NFC, which is the most common technology used in the EU. This will let their users “tap and go” with their payments. A double-click to open apps, Face ID, Touch ID, and passcodes for security are just some of the important iOS features they will be able to use.
Apple will also let users make a cash app other than Apple cash their default.
After getting a lot of complaints, the bloc’s competition division started an official investigation into Apple Pay in June 2020. Apple Pay is a mobile payment and wallet app. At first, the investigation was only supposed to look into Apple Pay as a whole. Later, the case became more focused on how Apple’s technology could be used for wireless payments.
Two years later, in May 2022, the EU said it had found that Apple abused its dominant position to stop competitors from offering NFC-enabled contactless payments on the iPhone. This meant that those competitors couldn’t make their own mobile wallets that could compete with Apple Pay equally.
The EU was especially upset that Apple made it harder for competitors to make wallet apps that can connect directly to NFC payment terminals, like Apple Pay. It thought that the limit would unfairly help Apple’s contactless payment technology gain market share. The EU also said that it wanted Apple to give rivals full access to NFC so that they could make their own wallets.
Apple was given the chance to reply to the EU’s Statement of Objections from May 2022. In January 2024, it made an offer to settle the case by making changes. This was the next big event. It wanted third parties that are making mobile wallets and payment services to have free access to more NFC features on iOS devices through a set of APIs. These third parties would not have to use Apple’s payment or wallet technology.
Competitors would still not be able to get to a special chip on Apple products called the secure element. Apple uses this chip to make Apple Pay transactions safer. But Apple said it would give NFC parts “equivalent access” through a feature known as “Host Card Emulation” (HCE) mode. It said that this would let third-party wallets safely store payment information and use NFC to make deals, without being able to access the secure element.
Apple also promised at the time to give third parties access to extra features and functions, such as setting default payment apps and giving them access to authentication features like Face ID, its biometric identity tech. It also said it would use FRAND (Fair, Reasonable, and Non-Discriminatory) standards to decide whether to let people use NFC.
Extra Strong Promises
Thursday, Vestager said that it had accepted Apple’s offer after pushing for some changes.
Because competitors were kept out of the market, it might have hurt creativity. This lessening of options and new ideas is bad. Consumers will lose out, and it’s against EU market rules. “Earlier this year, Apple made a set of promises to address these concerns,” she said.
“We put a package through tests and got feedback on whether the solutions could work and address our concerns over the last month.” A lot of people were interested in the problem. A lot of banks, app makers, card issuers, and other financial groups told us what they thought. We gave those words a lot of thought and asked Apple to keep their promises. Then Apple came up with better solutions, and now we’re making those solutions enforceable against Apple.
The Commission’s news release goes into more detail about how Apple improved its January offer in response to feedback from the industry. Some of the things Apple promised to do were:
- Taking away the need for developers to have a Payment Service Provider (PSP) license or a legally binding deal with a PSP in order to use the NFC input;
- Changing the HCE design to keep up with changing bank standards that Apple Pay uses;
And cutting down on the time it takes to settle any disagreements, among other things.
Since the EU started the antitrust case against Apple Pay, the bloc has passed an update to its competition rulesbook. This is meant to make digital markets more open to competition by requiring upfront payments on a number of major platforms, such as Apple’s iOS, so that tech giants can’t stop competitors from using key infrastructure they run. The Digital Markets Act (DMA) is something that EU lawmakers want to speed up the process of resetting digital power and bringing competition back to markets that have become too skewed.
Not long after the EU said it would be talking to people in the industry about Apple Pay, the company said the changes it had suggested also met DMA standards.
Vestager said that Apple’s promises about Apple Pay that the EU has agreed to go beyond what the DMA calls for. “For example, they have ways to keep an eye on things and settle disagreements,” she said, adding, “This shows that antitrust enforcement goes hand in hand with the DMA.”
This means that Apple can’t use its power or the iPhone environment to stop mobile wallets from coming out. These changes will help both customers and wallet developers who are competing with each other. They will allow for more innovation and choice while still keeping payments safe.
Apple has to keep the promises for 10 years. If you don’t follow them, you could face harsh punishments.
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Someone from Apple was asked for comment and sent this statement: “Apple is giving developers in the European Economic Area the option to use Host Card Emulation-based APIs to enable NFC contactless payments and transactions for car keys, closed loop transit, corporate badges, home keys, hotel keys, merchant loyalty/rewards, and event tickets from within their iOS apps.” Apple Pay and Apple Wallet will still be available to users and developers in the EEA. They will continue to offer a simple, safe, and private way to pay, and Apple Wallet will still be able to hold gift cards.
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