"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.