Apple Pay growth will make it the next antitrust fight with regulators

Apple Pay will be Apple's next regulatory battle

Apple Pay use has grown significantly since the pandemic began, and regulators are taking note as antitrust probes have already begun.

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.

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41 Comments

igforbes

said about 3 years ago

I don’t understand the issue. You wouldn’t sue Walmart because they didn’t have big enough “Shop at Target” signs.

lkrupp

said about 3 years ago

If anybody is going to fuck up the internet it will be the government. Why Apple Pay? As the article points out Apple is in no way the dominant mobile platform in terns of contactless payments. And if a user is unhappy that Apple does not allow other NFC payment systems that user can switch to THE dominant platform, namely Android.

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.

EsquireCats

said about 3 years ago

While regulatory oversight is good - I don’t see any issues with Apple Pay, in much the same way that my credit cards don’t have a monopoly on my wallet space.

Convenience and user interest are not grounds to establish monopoly.

chaicka

said about 3 years ago

Unfair and Biased.

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.

flydog

said about 3 years ago

igforbes said:

I don’t understand the issue. You wouldn’t sue Walmart because they didn’t have big enough “Shop at Target” signs.

There is no issue. All of these antitrust arguments are predicating on narrowing the relevant market to a single product, and then arguing that the company offering that product has a monopoly over its own product.

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

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