A proposed federal class-action lawsuit against Apple Pay has been partially denied by California Northern District Judge Jeffrey White. The lawsuit was filed by three credit unions who accused Apple of violating the Sherman Anti-Trust Act. Apple Pay was accused of charging excessive processing fees and being exclusionary by not allowing other digital wallets to access its NFC-scanning hardware.
Apple Pay as a Monopoly
The judge agreed with the credit unions’ argument that Apple Pay’s convenience and functionality surpassed that of QR code payment apps like Venmo. Consequently, iOS tap-to-pay was considered to be a market unto itself. Apple Pay was seen as a monopoly due to its exclusive access to NFC-scanning hardware. The lawyers argued that Apple would face competition if not for this NFC reader detail, making them the only significant player in this market.
Lawyers representing the credit unions claimed that Apple Pay was “unlawfully tied” to Apple devices such as iPhones, tablets, and watches. However, Judge White sided with Apple’s argument that the claim was baseless because Apple Pay is a free service and users are not compelled to use it. Despite this, the judge acknowledged that the claim of Apple having a monopoly was “plausible.”
Judge White found merit in the argument that Apple charges “arbitrary and inflated fees” for payment processing. This lack of competition within the iOS digital payments market was deemed harmful to consumers. Additionally, the exclusion of third-party apps from accessing NFC technology was seen as anticompetitive by the judge.
The European Union (EU) had previously expressed similar concerns regarding Apple Pay’s monopoly status. In a preliminary ruling made in 2022, the EU also highlighted Apple’s exclusionary use of the iPhone’s NFC reader as anticompetitive. This aligns with the judge’s conclusion in the current lawsuit.
Apple and the credit unions involved in the lawsuit are scheduled to appear in court again on December 1st. It remains to be seen how the court proceedings will unfold and what impact the final judgment will have on Apple Pay’s operations. If the court rules against Apple, it could potentially lead to changes in the company’s practices and open the doors for more competition in the iOS digital payments market.
The partial denial of the proposed federal class-action lawsuit against Apple Pay indicates that the claims of monopoly and anticompetitive behavior have some validity. Judge White acknowledged that Apple charges excessive fees, limits competition by excluding third-party apps from NFC access, and potentially ties Apple Pay to its own devices. The court proceedings on December 1st will shed further light on the future of Apple Pay and its place in the digital payments market.
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