Apple has been hit with a lawsuit in the US over its Apple Pay payment system. The tech company is accused of using its market power in the mobile phone industry to mitigate competition from other payment card issuers.
The class-action complaint was filed in a federal court in California on Monday by Iowa-based chartered credit union Affinity Credit Union.
According to the complaint, Apple “coerces” consumers who use its smartphones, smart watches, and tablets into using its own wallet for contactless payments. Makers of Android-based devices, however, allow consumers to choose wallets like Google Pay and Samsung Pay.
The complaint also alleged that Apple prevented consumers from using other mobile wallets capable of offering competitive tap and pay solutions.
Iowa’s Affinity Credit Union said Apple’s anti-competitive behavior forced the more than 4,000 banks and credit unions that use Apple Pay to pay at least $1 billion in excess fees annually for the privilege.
“Apple’s conduct harms not only issuers, but also consumers and competition as a whole,” said Affinity Credit Union.
“If Apple faced competition, it could not sustain these substantial fees,” the company added.
The lawsuit seeks unspecified damages, along with a stop to Apple’s alleged anti-competitive conduct.
Another Lawsuit
Apple already faces a potentially heavy fine after European Union regulators said in May that it had abused its dominance of iOS devices and mobile wallets. The EU added that the tech giant did this by refusing to give payment rivals access to its technology.
According to the complaint, Apple charges issuers a 0.15% fee on credit transactions and a flat 0.5 cent fee on debit transactions using Apple Pay. Android-based rivals, on the other hand, charge nothing for these transactions.
The plaintiff is represented by the law firms Hagens Berman Sobol Shapiro and Sperling and Slater.
In August 2021, they helped secure a $100 million settlement for smaller iOS developers claiming that Apple overcharged them on commissions.
The EU’s digital chief Magrethe Vestager said in May that Apple claimed it couldn’t provide access to Near Field Communication (NFC) for security reasons. NFC is a wireless technology that’s needed to make “tap and go” payments in stores with a mobile device.
“Our investigation to date did not reveal any evidence that would point to such a higher security risk,” added Vestager on the EU’s website. “On the contrary, evidence on our file indicates that Apple’s conduct cannot be justified by security concerns.”