A complaint filed by plaintiff Affinity Credit Union on Monday alleges that Apple illegally blocks competition in the market for tap-and-pay solutions, in turn charging banks and other institutions offering payment cards Apple Pay fees that are “manifestly supracompetitive.”
The complaint explains that the recent explosion of tap-and-pay systems stems from the advent of “Near Field Communication” (NFC) technology. “With an NFC chip, any smart device can send a wireless signal to an NFC-enabled payment terminal from close proximity,” the suit says. More than 90% of domestic retailers accept mobile wallets, and at least 70% of Americans use them, the complaint adds.
It describes Apple as a leading manufacturer of smart devices including phones, tablets, and watches, but also one that “is not content to dominate these mobile device markets.” Instead, the suit argues that Apple flexes its market power to prevent consumers from using competing mobile wallets offering tap-and-pay solutions other than Apple Pay.
The complaint contrasts this illegal tying behavior to that of competitor Google, the owner of Android, “which does not restrict access to NFC technology on Android devices—it is available for use to all comers, including digital wallets that compete with Google’s digital wallet, Google Pay.”
In addition, the complaint says that Apple exacts supracompetitive fees from card issuers, the proposed class here, to the tune of $1 billion annually, whereas they pay $0 for accessing functionally identical Android wallets. The filing explains that Apple charges card issuers a fee that they cannot pass on to consumers of 15 basis points on credit (.15%) and a flat 0.5 cents on debit.
Alongside the tying claim, the plaintiff brings a claim for unlawful monopolization, or at least attempted monopolization, of the market for tap and pay mobile wallets on iOS. The suit seeks monetary relief and injunctive relief to stop Apple’s allegedly ongoing exclusionary practices and remediate the harm they have caused.