IOWA, USA — An Iowa credit union is suing Apple for anti-trust violations regarding the company’s Apple Pay feature.
A proposed class-action lawsuit from Affinity Credit Union in Iowa accuses Apple of illegally profiting from the software by limiting iPhone users’ ability to use other tap-to-pay features Monday.
According to the lawsuit, which was filed on behalf of payment card issuers, Apple’s “monopoly” on tap-to-pay methods for iPhone users combined with the charges card issuers must pay constitutes anti-competitive behavior.
Apple Pay charges card issuers a .15% fee for credit transactions and 0.5 cents on debit transactions.
Other apps are allegedly unserviceable for iPhone users due to Apple’s restriction on accessing iOS' Near Field Communication, or NFC.
"Facing competition in the Tap and Pay iOS Mobile Wallet Market, Apple would not be able to sustain its credit or debit transaction fees," the lawsuit says. "The Android tap and pay mobile market is case in point. There, NFC technology is open to all comers, and Google Pay and Samsung Pay compete to provide tap and pay solutions. In this more competitive market, neither Google Pay nor Samsung Pay charge issuers a fee."
"Google, the owner of Android, 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," the lawsuit continues. "In contrast to the Android ecosystem, there is only one tap and pay mobile wallet that can be used on Apple’s iOS devices ... The only option is Apple Pay, Apple’s own proprietary service."
The lawsuit contends that iPhones are capable of downloading other tap-to-pay methods, but they are not permitted to actually use them, making Apple Pay the only choice for users wanting to complete a contactless transaction.
The lawsuit alleges that, “if either of these solutions (or others) were permitted to access the NFC interface on iOS, they would attract issuers and users and pose a competitive threat to Apple Pay.”
Fees for card issuers have brought in up to $1 billion annually for Apple, according to the lawsuit.
Apple is facing a similar lawsuit in the European Union about denying access for third-party app developers to use the iOS NFC interface, therefore shutting out any competition for tap-to-pay methods. Apple has denied all allegations in the EU lawsuit.
Local 5 has reached out to Apple regarding Affinity Credit Union's lawsuit and will update this story as more information becomes available.