A proposed class-action lawsuit against Apple today accuses the company of violating U.S. antitrust law by allowing Apple Pay to only be offered for iPhone, iPad, or Apple Watch tap-to-pay mobile wallet.
The lawsuit, filed by the law firm Hagens Berman and Sperling & Slater, alleges that Apple is preventing competing services like Google Pay or Samsung Pay from offering tap-to-pay functionality on Apple devices by preventing competitors from using NFC technology on its devices, illegal every year. Profit of at least $1 billion.
For every Apple Pay transaction completed with the U.S. issuer’s payment card, the card issuer must pay Apple a 0.15 percent credit card fee and a half-cent debit card fee, the lawsuit says. In contrast, Google allows multiple mobile wallets on Android smartphones and doesn’t charge U.S. card issuers for tap-to-pay.
Steve Berman, co-founder and managing partner of Hagens Berman, said: “When you compare the capabilities of Apple Pay to mobile wallets on Android devices — Google Pay, Samsung Pay — you’re basically holding up a mirror, They’re basically the same thing. However, card issuers are offering the same service on Android without paying any fees at all, and with Apple Pay, they’re costing them $1 billion a year.”
The lawsuit says Apple will not be able to continue charging “substantial fees” if the Apple Pay service faces competition on Apple devices. The lawsuit, filed in the U.S. District Court for the Northern California District, specifically accuses Apple of repeatedly violating the federal Sherman Act by “bundling” Apple Pay with its mobile devices and monopolizing the “click-to-play iOS mobile wallet market.”
The lawsuit seeks monetary relief for all U.S. card issuers that pay Apple for any Apple Pay transaction made using any of its payment cards. Hagens Berman said this is the third time it has sued Apple for violating antitrust laws.
In 2015, the law firm reached a $560 million settlement with Apple and publishers over e-book pricing, and earlier this year reached a $100 million settlement with Apple on behalf of iOS developers, the developers said Apple’s standard 30% commission on App Store in-app purchases at the time was too high.
Apple Pay is facing similar scrutiny in other regions, including Australia and Europe. In May, the European Commission notified Apple of its preliminary view that the company was abusing its dominance of the “mobile wallet on iOS devices” market by restricting NFC technology on Apple devices for contactless payments in stores.
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