After a 2020 in which he has faced the rebellion of Epic Games among other developers for the commissions of the App Store, Apple could have a new judicial front ahead with its contactless payment system for iPhones, Apple Pay. The investigation opened by the European Commission last june against the payment system and the application store for violating the competition rules, and the one that this same December has launched the antitrust body of the Netherlands They anticipate a hot 2021 for Apple Pay.
Although it has so far gone unnoticed in the United States, with only one mention in the lengthy 450-page report by the US Congress in its investigation against big technology, the growth of contactless payments due to the pandemic has driven Apple Pay , which could have reached this year 500 million usersaccording to analysts at Loup Ventures, who estimate that about half of those who own an iPhone have activated their digital wallet.
“Apple Pay is a dominating app, more than many people have realized until now. And it is going to be the battleground of the regulators in the future, “warns the executive director of the Californian payment company Marqeta, Jason Gardner, in statements to the Financial Times.
Apple obtains huge profits thanks to its “monopoly” in the business of apps for iOS, according to the investigation denounced to the technologies of the US Congress
The regulatory battle around Apple’s wallet has a clear motive: today, the American giant only allows the use of NFC technology —The one that allows payments without contact, communicating the telephone with the payment terminals— with Apple Pay on iPhones and Apple Watches, while it vetoes that technology from its competitors in this segment.
“Apple only gives the consumer an option in the use of this technology to pay for services, and this is something that will attract the attention of regulators,” he explains to FT Jonathan Osborne, a former Florida prosecutor and attorney for the Gunster Firm.
The head of Apple Pay, Jennifer Bailey assured the European Commission in December the reason for the veto is not commercial, but security. “The rivals use a technical architecture that may be less private and less secure,” argued the executive of the Cupertino company, recalling that Apple does not collect information on the bank cards of its users.
This is the reason behind the Dutch anti-competition authority to launch your investigation arguing that it “reduces the freedom of choice of consumers and businesses” and with the aim that Apple of access to NFC technology to other applications.
A business with billions of euros in fees
Apple charges a commission of approximately 0.15% of payments, and according to Bernstein analysts, one in ten transactions on the planet could pass through it in 2025. But this forecast, made before the pandemic, could be much higher after COVID-19 has increased the demand for payments without Contact.
That growth could lead Apple Pay to generate more than 5.3 billion euros (6.5 billion dollars) in commissions in 2024, according to estimates from investment bank Evercore ISI. “There is no reason why it cannot grow to generate tens of billions of dollars in ten years,” adds another analyst to the FT.
A business to which new services could be added soon, such as the possibility of deferring payment or entering the microcredit business, a path that has already been taken by competitors such as the Chinese Alipay and We Chat.
In fact, the CEO of Apple, Tim Cook, already hinted in his last conference with analysts that Apple Pay was doing “exceptionally well” and that the momentum of the pandemic to contactless payments could lead them to launch more functionalities. “We are very optimistic about this business. We believe that there are several things that Apple can do in this sector and it is an area that generates a lot of interest.“, argued the head of the apple company.
A growth that is already closely monitored by the European Commission and that may become the next subject of legal disputes for Apple in 2021, a new front that adds to the problems with the App Store and the controversy of its new iOS update, that has taken Facebook and other digital advertising companies into arms.
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