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Apple Pay bags Cupertino another antitrust lawsuit

If this sounds familiar, it's because the EU is investigating the same thing

Apple has been hit by another class-action lawsuit over its mobile payment service – this time in the US with much of the same logic as a similar case in the EU.

Filed in California federal court by Iowa-based Affinity Credit Union, the lawsuit [PDF] alleges that Apple violates the Sherman Act by tying Apple Pay to its mobile devices, and also for both monopolizing and attempting to monopolize tap and pay on iOS.

According to the suit, Apple "exercises its market power… by requiring that consumers of its mobile devices also acquire its mobile wallet – Apple Pay – and prevents consumers from using competing mobile wallets."

The Sherman Act, passed in 1890, was the US's first antitrust law and bans "every contract, combination, or conspiracy in restraint of trade," and "monopolization, attempted monopolization, or conspiracy or combination to monopolize." 

The suit alleges that Apple not only blocks other mobile wallets and tap-to-pay systems, but then imposes a fee on card issuers for the privilege of doing so.

"Whenever an Apple Pay transaction is completed on a US issuer's payment card, the issuer must pay Apple a fee – 15 basis points on credit (.15 percent) and a flat 0.5 cents ($0.005) on debit," the suit said.

Such fees reportedly earned Apple $1 billion in 2019, and the suit claims that number is predicted to quadruple by 2023. The suit also alleges that Apple doesn't allow card issuers to pass those fees onto customers.

Apple's approach stands in stark contrast to Android devices that, with open near-field communication hardware accessible by a number of digital wallets and tap-to-pay services, don't charge any transaction fees. "If Apple faced competition, it could not sustain these substantial fees," the suit claims. 

Apple has not responded to requests for comment from The Register. 

Is there an echo in here?

In May, the EU issued its own lawsuit over the monopolistic nature of Apple Pay - the fourth anti-competition suit filed against Apple by the EU in the past two years. 

The EU's case alleges that Apple restricted competition to the benefit of Apple Pay, which the European Commission's VP for competition policy, Margrethe Vestager, said is illegal under EU competition laws. 

Similarly to how it has addressed comparable complaints in the past, Apple has said that opening its NFC hardware to third-party developers would be a security risk for users, but the European Commission has said its own investigations did not support Apple's claim

In the US case, Affinity's lawyers are trying to create a class of all US entities that have enabled cards for Apple Pay and subsequently had to pay fees to Apple for user transactions. The plaintiff hasn't specified their desired payout, but did say there are over 4,000 banks and credit unions eligible to join the class action.

This case will be one to watch. As pointed out by the BBC, the plaintiff is represented by the same legal firms that successfully argued a $100 million settlement against Apple for overcharging small developers on commissions. ®

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