EU Commission seeks feedback over Apple Pay’s commitments

The European Commission shared commitments by Apple to allow third-party payments on Friday (19 January) and invited comments on them due to competition concerns over restricted access to the technology used for contactless payments on mobile devices.

Contactless payments require a technology called Near-Field Communication (NFC), consisting of short-range wireless technologies that enable communication between two electronic devices over a distance of 4 cm or less. This allows customers to physically pay with their phones on terminals, many using it instead of their cards.

The European Commission pointed out that Apple devices have Apple Pay, which enables iPhone users to use contactless payments.

Since this is the only payment solution that can access the hardware and software necessary for NFC, the company has a dominant position in mobile wallet markets on its operating system, iOS. The tech giant does not let third-party mobile wallet app developers access the necessary NFC components.

The Commission informed Apple in May 2022 about its concerns that this could restrict the competition in the mobile wallets market on devices running on iOS and put Apple potentially in breach of EU antitrust rules.

“Through our ongoing discussions with the European Commission, we have offered commitments to provide third-party developers in the European Economic Area with an option that will enable their users to make NFC contactless payments from within their iOS apps, separate from Apple Pay and Apple Wallet,” an Apple representative told Euractiv.

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“Apple Pay will continue to be a broadly available option, and over 3,000 issuing banks across all EEA countries will still be able to offer the unparalleled privacy and security of Apple Pay, as well as its great user experience,” the representative added.

The Commission shared Apple’s offered remedies to gather stakeholders’ feedback on whether they fully satisfy the competition concerns.

Apple suggests allowing third-party mobile wallet and payment service providers to access and collaborate through Application Programming Interfaces (APIs), which have the NFC technology.

Providers would not have to pay to access APIs, which enable computer programs to communicate. They could do so without having to access Apple Pay or Apple Wallet, an app to virtually store credit or debit cards that can then be used with Apple Pay.

This means that Apple would also let APIs access NFC components in the Host Card Emulation (HCE) mode, which stores payment credentials and completes transactions via NFC without requiring an in-device secure element.

However, third-party payments, banking, and digital wallet app developers will have to conclude an Automatic Data Processing license agreement before getting access. If Apple denies access to NFC input, it will be reviewed by independent experts.

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The commitments will apply to every third-party mobile wallet developer established in the European Economic Area (EEA) and to every iOS user with a registered Apple ID, the account used to access Apple services in the EEA. However, the apps could also be used to pay within stores outside of the area.

According to Apple, additional features such as setting a preferred payment app and accessing authentication features like FaceID and a suppression mechanism will also be available. At the same time, no changes can be expected in Apple Pay.

The commitments would remain in force for ten years and be monitored by a monitoring trustee, reporting regularly to the Commission.

It is possible that with the Digital Markets Act (DMA) entering into force on 7 March, the proposed commitments would also serve as a solution for Apple to comply with the DMA.

The European Commission has now invited all interested parties to submit their views on the proposed commitments within a month after the commitments’ summary is published in the EU’s official journal.

[Edited by Luca Bertuzzi/Zoran Radosavljevic]

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