Complaint: Apple Pay charges card companies monopoly rents

"Card issuers pay a reported $1 billion annually in fees on Apple Pay and $0 for accessing functionally identical Android wallets."

From Affinity Credit Union vs. Apple Inc., filed Monday in U.S. District Court, Northern District of California:

In contrast to the Android ecosystem, there is only one tap and pay mobile wallet that can be used on Apple’s iOS devices (iPhone, iPad and Apple Watch). The only option is Apple Pay, Apple’s own proprietary service.

Apple did not secure preeminence for Apple Pay by building a better product. Apple Pay is mostly indistinguishable from Google Pay and Samsung Pay from a functionality standpoint. Rather, Apple propped up Apple Pay by requiring iOS users to use its Apple Pay service exclusively for tap and pay mobile wallet transactions, barring all would-be and free competitors from accessing the NFC interface needed to compete.

Having barred all competitors from its devices, Apple charges payment card issuers fees that no other mobile wallet ventures to impose. Whenever an Apple Pay transaction is completed on a U.S. issuer’s payment card, the issuer must pay Apple a fee—15 basis points on credit (.15%) and a flat 0.5 cents ($0.005) on debit. These fees generated a reported $1 billion for Apple in 2019, and this revenue stream—earned from card issuers—is predicted to quadruple by 2023.

Apple’s issuer fees are manifestly supracompetitive and the result of the anticompetitive conduct alleged herein. In the Android ecosystem, where multiple digital wallets compete, there are no issuer fees whatsoever. The upshot is that card issuers—the proposed class here—pay a reported $1 billion annually in fees on Apple Pay and $0 for accessing functionally identical Android wallets. If Apple faced competition, it could not sustain these substantial fees. Alternative mobile wallets, including Google Pay, would be downloaded onto iOS devices, and card issuers would agree to make their cards available on those substitute mobile wallets at zero cost and would not agree to make their cards available on Apple Pay unless and until Apple reduced its price to the competitive level...

[T]he number of Apple Pay issuers has increased steadily since Apple Pay’s launch, reaching a reported 5,480 banks worldwide by 2020 (20% increase over 2019). This reveals that issuers do not expect that removing Apple Pay would result in consumers switching to Android wallets, rather they fear consumers would switch to cards issued by other banks instead.

Spotted by friend-of-the-blog Thomas Williams, who says he learns as much about Apple from lawsuits filed against them as he does from Apple 3.0.

My take: I wouldn't want to go head-to-head with Apple in fintech.


  1. Fred Stein said:
    A quick web search reveals:

    “Apple Pay and Google Pay are largely identical offerings. Apple may be to be easier to use, but Google has more features. Google acts as an intermediary and stores your card details on its servers, while Apple has explicitly declared that it will never track your transactions.”

    Quelle surprise! Google gives it (access to their wallet and NFC) away in order to get YOUR data. Don’t we all crave a big wet covid, monkey pox infested kiss?

    July 19, 2022
  2. “Whether there is an antitrust market (or submarket or aftermarket) for Tap and Pay iOS Mobile Wallets;” The lawyer writing up the latest CLASS ACTION COMPLAINT FOR VIOLATION OF THE SHERMAN ACT AND CLAYTON ACT from a bank in Iowa inserted that line in his complaint. He wants the court to decide if he has a case and then have the judge rule Apple violated federal antitrust laws.
    Meanwhile, back at the ranch, I recall Apple teaching developers at WWDC how to use NFC for anything they want, starting in September.
    Perhaps dudes behind Bloomberg tale didn’t short enough shares.

    July 19, 2022
  3. David Drinkwater said:
    I wonder what the total commerce value of Apple’s payments is. If $1 billion is their take, then the total value of sales through Apple Pay is in the neighborhood of $666 billion ($1 billion / 0.15% or 0.0015). Does the Android sales market match that? Perhaps customers are voting with their feet and using Apple Pay rather than Google Pay or Samsung Pay.

    Also, although the “functionality” is “effectively “similar”, the under the hood operation of Apple Pay is surely entirely different than the Google Pay or Samsung Pay “we get your data” approach, as has been suggested above.

    If you told me that I had to pay 0.15% extra to use an Apple Pay functionality, I would say “hell, yeah!” and let Apple pay be back in increased dividends.

    July 19, 2022
  4. Bart Yee said:
    Credit card issuers tout all the time that their card(s) are better because they give you cash back, more miles, more rewards, more crap, etc. in exchange for you signing up and, ahem, either paying a “membership” fee annually, a MASSIVE double digit interest cost monthly for ANY balance held over, massive charges / fees for cash advance and other services, plus they try to dupe you into other fee-for-services like internet or credit protection, mortgages, etc. from partner banks. Apparently, nothing is “free” from the credit card companies either.

    Now they have the GALL to complain about having to pay Apple to access Apple users/owners who EXPRESSLY prefer to use Apple products and Apple Pay exclusively and eschew using Google Pay/Samsung Pay for multiple reasons? Jeez, they still get the transaction and they can still charge all the same fees on the same card, they just have a slightly higher cost of doing business with Apple Pay users. Not Apple’s problem or fault if you can’t monetize Google Android users as much because they don’t spend that much or because only a portion of Android devices can utilize Google/Samsung Pay or that Apple users consistently outspend and out credit Android users. If you want free, you can access Android all you want.

    You credit card companies want access to Apple Pay users, then pay up, it’s like a subscription for user access, not unlike your charges to get credit from you by consumers. As for competition, well, there’s apparently 4500 banks worldwide who do agree and pay the fees in (somewhat willing) exchange for Apple user access – otherwise just follow WalMart, Lowes, Home Depot, and some others in just banning Apple Pay users and voila!, no fees to pay. Just build your own smart devices, create the hardware and OS, and get your own users. I’m sure the Billion you save could make that happen. In about 10 years!!


    July 20, 2022
  5. Neal Guttenberg said:
    For me, the nice thing about Apple Pay is that I can use it from my watch. I don’t even have to get to my phone anymore. It is very convenient. I still will occasionally have a clerk be amazed that you can use your watch to pay. I don’t know if Android has anything that is comparable. Because Apple controls the ecosystem which continues to expand in terms of the installed base and the different devices that we use, it can come up with solutions that may not be available to other systems.

    July 20, 2022
  6. Bart Yee said:
    Here’s another relevant comments from 9to5Mac comment section:
    a day ago
    Hilarious that banks consider Apple anti-competitive. The same banking system that:
    – Pays you 0.5-1% interest on your savings while charging you 9.99-19.99% interest on loans you get from them.
    – That charge you a monthly account access fee just for the privilege of using their bank.
    – That charge you 19.99-29.99% interest on credit card balances.
    – That take a 3% processing fee every time you buy something at merchant, while complaining about Apple taking 0.15%.
    – That charge you extra fees for anything they can get away with (like using a different ATM or getting cash advance from your credit card).

    And yet people will support them because, Apple.

    July 20, 2022
  7. Tom Farris said:
    While I haven’t read the article, the lawsuit filer identity does say some things… Credit is about risk…

    First off if a Credit Union is equated to a Bank with a State or Federal Charter then someone’s financial education is lacking. It has been a long time since I have delved into much of the minutia but my recollection is that the 3 – 4% Credit Card transaction fee goes in large measure (if not all) to Visa, MC, Discover, etc., not the bank. That is the fee they get for you using the interbank process that they have built. (Since all their fees are essentially the same I wonder why they are not subject to anti-trust sniffers)
    I’m middle of the road credit wise and my Credit Union’s credit card rate is 11.99% and has been that for as long as I have had the card. (I pay my bills!) But I can get a new car loan for 84 months for 2.49%, and a fully unsecured loan for 13.99%. Most if not all Credit Unions are in a nation-wide Co-Op with their ATM’s…I have FREE/NO FEE withdrawals available at over 28,000 ATM’s. I’m pretty sure that Cash Advance Fees on your Credit Card also go most if not all to Visa, et al.
    My Checking account is free if I have an electronic bank statement.
    Real “Banks” generally do have many of the negative rates & fees you refer to and more not mentioned. But unless you travel a lot where people need nationwide or international personal or business access, people are needlessly spending money (and complaining) about costs that they themselves can mitigate.
    And has been pointed out here, in looking at ‘others’ business practices…Nothing is free.
    As a final note, while many loans are at higher rates, most of those are for relatively short duration…your home loans which are for 30 years usually are pretty darn cheap money…just now getting into the 5.00%+ range, and again it has been a long time since I’ve done any calculations, but with the Homeowner’s Exemption and Interest write-offs and other tax saving tweaks, I imagine that the ‘real’ interest rate being paid is a fair bit less. Your mileage may vary.

    July 20, 2022

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