Apple is preparing for a fight with the UK's Competition and Markets Authority (CMA), which plans to force the iPhone maker to open its digital wallet technology to rival payments providers. The move would be a blow to the dominance of Apple Pay. According to several people familiar with the matter, the CMA is set to publish proposals next week arguing that Apple exercises unfair power over the UK's tap-to-pay market.
The proposed changes would allow iPhone users to choose alternatives to Apple Pay when using the device's tap-to-pay feature. The measures would form part of the CMA's conduct requirements on Apple, which received so-called "strategic market status" under the UK's digital competition rules last year. Under those rules, designated companies face fines of up to 10 per cent of global turnover for breaches. Apple is likely to challenge the decision through the courts, according to two people briefed on the matter.
Access to the iPhone's payment chip would benefit fintechs such as PayPal, Revolut and Monzo, as well as traditional banks, which have long argued they are shut out of the tap-to-pay function. They have also complained about the 0.15 per cent cut Apple takes on credit card charges made through Apple Pay. Apple argues that restricting access to its near-field communication (NFC) chip protects users' security and helps fight fraud.
The CMA is likely to recommend a European-style system, similar to the one imposed under the EU's Digital Markets Act, which lets other operators build wallets that users can select as their default. Regulators are concerned that the current system is anti-competitive, with British consumers missing out because providers are unwilling to build separate wallets for Europe and the UK.
Source: Financial Times Companies · Summarized by HeadlinesBriefing