A proposed class action lawsuit is taking aim at Apple Pay, claiming that Apple has an illegal monopoly over contactless payments on the iPhone, letting it force card issuers into paying fees (via Bloomberg). The suit is being kicked off by Iowa-based Affinity Credit Union, which issues debit and credit cards that are compatible with Apple Pay, but the company’s lawyers hope to make it a class-action case so other card issuers can join the lawsuit.
According to the complaint, which you can read in full below, Apple makes over $1 billion a year charging credit card companies up to 0.15 percent per transaction in Apple Pay fees, and yet those same card issuers don’t have to pay anything when their customers use “functionally identical Android wallets.” The suit alleges that Apple violates antitrust law by making it so Apple Pay is the only service able to carry out NFC payments on its iPhones, iPads, and Apple Watches. It also says that Apple prevents card issuers from passing on those fees to customers, which makes it so iPhone owners don’t have any incentive to go find a cheaper payment method.
As we’ve discussed at length during the Epic v. Apple trial, a case like this can hinge on what a judge decides the relevant market might be — here, the plaintiffs say Apple has a monopoly on “Tap and Pay iOS mobile wallets.” But even if a judge agrees that’s true, they could still decide that there’s no real monopoly because customers can always switch to Android, where other mobile wallets exist.
Lawsuits aren’t automatically granted class-action status — a judge has to decide whether or not to grant that. However, the law firm handling the case for Affinity, Hagens Berman, has a bit of a track record with class-action suits against Apple; it was involved with getting developers a $100 million settlement after alleging that the App Store’s rules were unfair, as well as with the ebook price fixing case that ended with Apple returning around $400 million back to customers.
The goal of the lawsuit, according to a press release from the law firm, is to change the Apple policies that force all contactless payments to go through Apple Pay, and to make the company reimburse card issuers for the fees that the plaintiffs claims it illegally charged.
This isn’t the only challenge Apple is facing over how it runs Apple Pay. The EU recently objected to the fact that third-party developers can’t use the iPhone’s NFC system for payments, claiming that the restrictions lead to “less innovation and less choice for consumers for mobile wallets on iPhones.” Now, the company could face a legal battle over the issue in the US as well.