Apple violates U.S. antitrust law by making sure Apple Pay is the only e-wallet way to tap to pay via an iPhone, iPad or Apple Watch, a new class-action lawsuit filed Monday alleges.
The complaint says Apple profits illegally to the tune of $1 billion a year or more by blocking competitors like Google Pay and Samsung Pay from offering tap-to-pay transactions on Apple devices.
Class action suit alleges Apple Pay illegally blocks competition in tap-to-pay transactions
In filing the complaint on behalf of a class including credit unions and other financial institutions, law firms Hagens Berman and Sperling & Slater allege Apple illegally gains profits of at least $1 billion annually. It does so by blocking rivals from accessing NFC technology on its devices.
And that blocking keeps competing services like Google Pay and Samsung Pay from offering tap-to-pay payment functionality on Apple devices.
The complaint states that for every Apple Pay transaction completed with a U.S. issuer’s payment card, the issuer must pay Apple a fee of 0.15% for credit cards and half a cent for debit cards.
By contrast, Google allows multiple mobile wallets on Android smartphones and collects no fee for tap-to-pay transactions from U.S. card issuers.
“When you compare the functionality of Apple Pay to mobile wallets available on Android devices — Google Pay, Samsung Pay — you’re essentially holding up a mirror; they are essentially identical,” said Steve Berman, Hagens Berman co-founder and managing partner.
“And yet,” he continued, “the same service on Android that card issuers pay absolutely nothing for costs them a collective $1 billion annually through Apple Pay.”
The complaint argues that Apple couldn’t sustain its “substantial fees” for Apple Pay transactions if the service faced competition on Apple devices.
“On the surface, Apple Pay’s fees pushed onto card issuers may seem small, but truly the devil is in the details of Apple’s policies,” Berman said. “These fees add up, big time.”
Alleged Sherman Act violations
The class action was filed in U.S. district court in Northern California. It accuses Apple of multiple violations of the federal Sherman Act. It alleges that “tying” Apple Pay to the company’s mobile devices monopolizes the “tap and pay iOS mobile wallet market.”
The complaint seeks monetary relief for all U.S. card issuers that paid Apple a fee for any Apple Pay transaction made with any of its payment cards.
Hagens Berman noted this is its third lawsuit against Apple for antitrust violations. In 2015, the law firm secured a combined $560 million settlement against Apple and publishing companies due to price fixing of e-books. And earlier in 2022 the firm secured a $100 million settlement from Apple on behalf of iOS developers who found Apple’s then-standard 30% commission on App Store purchases excessive.
Regulators in various regions, such as Australia and Europe, have scrutinized Apple Pay. In May, the European Commission issued a preliminary view that Apple abused its dominant position in the “mobile wallets on iOS devices” market by limiting access to NFC technology on Apple devices for contactless payments in stores.
Apple has not commented on the lawsuit.