EU readies 'antitrust charges' against Apple Pay for locking rivals out of iPhone NFC chip

Apple's decision to only allow Apple Pay to access the NFC chip in iPhones could result in the Silicon Valley giant paying hefty anti-monopoly fines in Europe. The EU is set to file anti-competitive charges against Cupertino regarding its tap-to-pay system, Reuters reported, citing sources. Euro antitrust watchdogs are …

[Anonymous Coward]

While this is a real concern, it is only half the problem

The other half is the recalcitrance and incompetence on the POS terminal hardware side. Card terminals that can support contactless payments, but the installer pushed a configuration on them that blocks them. Systems using dark patterns that force you to press multiple buttons to select your preferred payment method, while the most expensive one is offered by default. Some want to force the transaction as credit/debit even through Apple Pay

Worst of all some of them insist on collecting a PIN on the POS hardware for what should be pinless transactions via Apple Pay, ensuring that it is still possible to skim PIN codes, and ensuring that under the current law those charges will be hard or impossible to challenge.

If you are going to address the phone/watch side of the problem, fix the other end at the same time while you are at it.

[elsergiovolador]

Re: While this is a real concern, it is only half the problem

Worst of all some of them insist on collecting a PIN on the POS hardware for what should be pinless transactions via Apple Pay, ensuring that it is still possible to skim PIN codes, and ensuring that under the current law those charges will be hard or impossible to challenge.

Isn't that an EU regulation that requires a PIN for every 5 transactions or if you accumulate more than £125 whichever comes first?

[John Robson]

Re: While this is a real concern, it is only half the problem

Nope - I've made plenty of large transactions without PIN...

[elsergiovolador]

Re: While this is a real concern, it is only half the problem

Some banks implemented it better some worse. Could be also down to terminals - some will just decline the transaction and you have to try again with a pin, other will correctly ask for PIN and you will have plenty in between.

[rjsmall]

Re: While this is a real concern, it is only half the problem

That is correct - PSD2 mandates this. There is an exemption that allows you to make contactless payments without PIN but the maximum single transaction is £100. (just went up) If you make five contactless transactions in a row or a specific total is reached (not sure what it is now) then you need to enter your PIN.

[Falmari]

Re: While this is a real concern, it is only half the problem

@rjsmall the total is now £250

[big_D]

Re: While this is a real concern, it is only half the problem

It is more than 5 transactions, I usually have to a PIN every week and a half or so, or when doing the weekly shop on my other card.

[elsergiovolador]

Re: While this is a real concern, it is only half the problem

It's depending on a bank - some didn't implement it properly. I have one where it does not seem to enforce it at all and have another, where is bang on every 5 transactions - which means I often have to type a pin every day - which is extremely annoying and defeats the purpose of having contactless payments. Imagine wanting to grab a coffee in a hurry, you tap in and transaction is declined - you have to ask them to try again, insert the card, type the pin and by that time your train is gone.

[Irongut]

Re: While this is a real concern, it is only half the problem

Imagine paying for your coffee with the correct cash and walking away before you can wave a phone. How fresh, how new.

[Anonymous Coward]

Re: While this is a real concern, it is only half the problem

Imagine making your coffee at home and saving enough to buy that tropical island ten years earlier...

[Boothy]

Re: While this is a real concern, it is only half the problem

Also sounds like the POS isn't set up correctly, or perhaps has some limitations in that model.

I use tap-to-pay most of the time now, and the other day had to use the PIN. All that happened to me was a prompt came up on the card reader after tapping, that simply asked me to insert card and enter my PIN. No decline message, no additional involvement from the staff etc. All handled by the POS.

[Robert Carnegie]

I decided to use my PIN more often anyway

since with contactless all the time, I forgot what my PIN was. Oops!

[John Brown (no body)]

Re: I decided to use my PIN more often anyway

If I'm not in a hurry, ie most of the time, I insert my card and use the PIN. It means those rare times I'm in a bit of a hurry the chances of the machine asking for a PIN is very, very low.

[AndyTempo]

Re: While this is a real concern, it is only half the problem

With apple pay in the UK, contactless is effectively without limit in many places. We paid a few k for a car at a dealer by just waving the phone.

[big_D]

Re: While this is a real concern, it is only half the problem

The POS terminals over here all support all standards and you just hold the NFC card or smartphone over the terminal and it automatically selects the correct payment method.

I use 2 different debit cards (different banks) and the bank payment app on my Android smartphone. The POS just takes the payment. I've seen people using iPhones as well and they work just the same, the POS automatically selects the right protocol.

PIN is required in Germany for transactions over 25€ (I believe, because of CORONA, they upped this to 100€ temporarily) or after a certain number of PIN-less transactions at a level below the limit. With my debit card and my bank payment app, I usually have to enter the PIN every 2 weeks or so on average.

[katrinab]

Re: While this is a real concern, it is only half the problem

I've never seen any of these problems in the UK - using Amex + Nationwide Visa for retailers that don't take Amex. I can't remember the last time I went somewhere that didn't take Apple Pay, and that includes small market / street traders.

[Manx Cat]

Re: While this is a real concern, it is only half the problem

I had to do a full Chip + PIN entry a couple of days ago, first time for 3 years.

However this was to verify my brand new card, so no complaints there...

[elsergiovolador]

Cost of business

Who thinks the fine will be lower than the profit made off of the said chip?

[anonymous boring coward]

Re: Cost of business

"Who thinks the fine will be lower than the profit made off of the said chip?"

EU has been known to hand out some pretty massive fines (billions).

And they can repeat the fine if Apple doesn't comply.

[elsergiovolador]

Re: Cost of business

So if the EU slaps let's say 4 billion fine and Apple made 10 billions, it is still a profit even if they (unlikely) slap another 4 billion fine.

[skwdenyer]

I’m probably unpopular, but I don’t see any foul here. Apple sell me a hardware + software product, tightly integrated. I suffer no loss from this lack of openness. I deliberately avoid Android because I don’t want this diversity & fragmentation.

Perhaps the EU could ask some consumers before claiming to act in their name?

[doublelayer]

You may not suffer, but people who would like to use other platforms do. Places who effectively must support Apple Pay, paying Apple their merchant fees, do. Not caring about a lack of competition doesn't stop that lack from existing, nor does your one experience necessarily mean you're the standard.

[DS999]

Merchants don't pay Apple's 0.15% fee, banks do. The merchant fees are the same for Apple Pay and non Apple Pay transactions.

And honestly the banks should be fine with that - they probably save more than that 0.15% on reduced fraud chargebacks for Apple Pay transactions.

[doublelayer]

"Merchants don't pay Apple's 0.15% fee, banks do. The merchant fees are the same for Apple Pay and non Apple Pay transactions."

I am not an expert here, but I don't think you can guarantee the second sentence. Banks are responsible for separating out the numbers and sending the funds to Apple, but they may have a mechanism to change the merchant fee based on that. For some contracts, fees are charged in a range, and banks charge at the high end of the range when they have extra charges they wish to pass along. This is transparent to the user in most cases, and it doesn't apply to all merchants, but it does happen. Various services that a payment method provides may seem free without knowing what comparative fees are, and merchants don't always have a choice to refuse those payment methods because there are few options and limited ability to control which is used.

[DS999]

I can guarantee the second sentence

Until a couple years ago I owned a business with a merchant account, and looked into this when it became able to accept NFC transactions. The banks eat Apple's 0.15% fee.

There are different rates for different cards (i.e. Amex transactions cost you more than Visa/MC do, which is why mostly only those places that get a lot of business travel or 1%ers are willing to accept Amex) but there is no difference in merchant fees for using the same card depending on whether Apple Pay was used or not.

[doublelayer]

Re: I can guarantee the second sentence

Did your account have fixed or variable fees for card types? The reason I ask is that people I know (not me, I don't know) who accept payments have informed me that variable fee contracts are quite common. Cards which are simple charge them lower fees, whereas cards that are more expensive for the banks to operate because they reward users or provide other services earn a higher one. Both cards are operated by the same card provider. They have many other factors that affect how high the fee is. I don't think that applies to everyone though, so it's possible that you had a different kind which doesn't pass these fees on. If yours did work as described, then maybe Apple Pay is the exception.

[DS999]

Re: I can guarantee the second sentence

It was variable fee. I don't think you can get any other type for a restaurant, and if you get one at a fixed rate I'm sure it would be a worse deal.

The way you comparison shop is to give them a spreadsheet downloaded from your POS system with your previous few months charges and they'll tell you how much they would have charged. If it was just "Visa is x%, MC is y%" it would be easy, but there's a fixed per transaction charge, which is different for the different cards and for whether it is debit or card, and whether it is card present or not present (you have "not present" charges if you take phone/online orders for pickup/delivery) before you even get into different percentage rates.

[skwdenyer]

Re: I can guarantee the second sentence

What you're not understanding is that the potential for fraud with Apple Pay is *way* less than other contactless options.

The banks might have to pay Apple a bit; but they're probably winning overall.

[Totally not a Cylon]

But that's just it.

Currently we have a choice of 2 platforms one open and one closed.

Many of us who chose Apple's closed eco system did so because it was closed.

What right do these organisations have to say you cannot have that system you must have this open system with multiple options for each process.

If you want an open system with multiple payment options, multiple app stores etc then choose Android, but if you just want one app store, one payment system then choose Apple.

Choice.

But too many groups today are determined to rip that choice away from us by forcing Apple to open their system and make it a clone of Google's Android.

[Anonymous Coward]

"Currently we have a choice of 2 platforms"

Exactly. And that means there's a a huge lack of competition. Both platforms are in a dominant position and the users have very little choices. Hence the antitrust investigations....

[anonymous boring coward]

"But too many groups today are determined to rip that choice away from us by forcing Apple to open their system and make it a clone of Google's Android."

Being able to choose which banking app to use isn't exactly ripping away choice, is it?

[John Robson]

You can already choose your banking app..

The only thing you can't do is have some malware use the NFC payment facility.

It's a choice, but it's not exactly a limiting one for the consumer...

You have an iPhone, so you already trust Apple to some extent, and you want to use the NFC for card payments... scan the card, and ... well that's it really.

Maybe we should "open up the roads" and give people the choice of driving on the left or right...

Not all choice is good.

[big_D]

At the end of the day, nobody is talking about ripping Apple Pay away from you.

If you want to remain in Apple's eco-system and just use Apple Pay, you can. On the other hand, if you don't want Apple looking over your shoulder on every transaction, you can opt to use a third party app.

It is the same on Android, you can simply use Google Pay, or you can install your bank's NFC payment app, if you don't want Google mining your payment habits. Nobody has banned Google Pay from Android devices, they have added choice.

[John Robson]

And you can get some malware to read and adjust those transactions...

You seriously think that Google aren't still looking over your shoulder just because the transaction is done with a banking app?

[big_D]

You can get malware on iPhones as well, what is your point?

[John Robson]

It's substantially harder to get malware to access elements of the secure enclave when there isn't a requirement for the door to be left open.

[Warm Braw]

Many of us who chose Apple's closed eco system did so because it was closed

There's no helping some people.

[Anonymous Coward]

Choice and a race to the bottom has just left millions of Britons with more expensive energy. Pointless "competition" that just results in lots of providers duplicating billing systems, "competing" against each other by promising prices not sustainable in the long term, and so on.

There are some on here who believe that a free-for-all-market is the only true choice. Frankly most of the time it presents only the illusion of choice and increased opportunities for fraudsters and shysters.

[Irongut]

An Apple sheep complaining about lack of choice? ROFL

[Anonymous Coward]

I agree

It may be anti-competitive for payment providers but as a consumer Apple Pay works, is secure (if there is any such thing), and costs me absolutely nada.

Apple’s practices on their own hardware is surely their own business; consumers have a choice not to use Apple products. It’s not quite like Microsoft’s practices in the 90s which were very much due to a monopoly.

[DevOpsTimothyC]

Re: I agree

and costs me absolutely nada

You might want to re-visit that part. Alot of companies have put up costs to cover the fees. They do this to all customers so while you think it's costing you nada you're not looking at all the reasons for the price increases

[Fred Daggy]

Re: I agree

Everyone realises that the cost of cash isn't free either? Sure, between me and the merchant, handing over 20 zorkmids isn't such a pain. However, as soon as you have even a small amount of it in pile, someone is going to think it's a good idea of relieving you of it.

So, a few costs of cash off the top of my head

- Safe,

- Counting of cash,

- Safe transport of said cash to financial institution

- Losses due to conterfieting (probably small, but still, unless your unlucky)

- Bank processing fees on cash

- Staff time because counting/transporting any amount of cash, large enough to make that cash a target, should not be trusted to one person

- Training of cash handlers

- Losses during transactions

- Losses due to staff "helping themselves"

- Losses due to members of the public thinking a needle/screwdriver/fireare/knife at the throat of the poor sod at the till is a valid withdrawal mechanism

- Security systems to monitor cash transactions

- Plenty more I've missed

You might not see thoses costs baked in to every transaction, but the merchant still has to pay it.

(Worked at a Service Station during University, and at the cash office of a large department store)

EU, want to do something genuinely helpful for consumers? Standardise clothing sizes, so a M in Italy maps to an M in Germany, etc. This shit drives my GF nuts when she's ordering online. Would foster a lot more competition and drive down prices.

[Falmari]

Re: I agree

@Fred Daggy i agree there is a cost to the merchant with cash certainly in the UK. I get some of my motorcycles serviced by a local mechanic. He is a small business a garage that just services and repairs motorcycles.

He would rather be paid by card than cash. The reason it saves trips to the bank. Also the cost of card is not much different as he is charged ((colour me shocked) to pay cash into his business account anyway. But when it comes to cards a bank debit card is best as it charges the merchant less than credit cards.

[skwdenyer]

Re: I agree

It has nothing to do with him not declaring tax? :)

[big_D]

Re: I agree

And? Nobody is saying you can't continue to use Apple Pay. They are just saying that it is a possible restrictive practice to not allow the user to select an alternative, if they want to. They are not saying that Apple can't offer Apple Pay any more and everybody will have to switch to another payment provider.

I live in a country that has very strong restrictions on what banks can and can't do and it is much more restrictive than what Apple could do with the data. Therefore, from a privacy viewpoint, I'd rather use my bank's payment app directly.

I'm not saying they will do anything with the data, but they have less restrictions on them than the banks, so they could theoretically do more with the collected data.

[Insert sadsack pun here]

Re: I agree

"Apple’s practices on their own hardware is surely their own business..."

The iPhone and Apple Pay are two separate products. Apple is forcing consumers to use only Apple Pay as the payment product if they want the iPhone product. This restricts the consumer's choice of payment products and prevents competition among payments providers.

[lglethal]

Re: I agree

"Apple’s practices on their own hardware is surely their own business..."

And this is where you're wrong. The moment you bought it, it's not Apple's Hardware. It's yours!

You decide what goes on the Phone and what you do with it. Not Apple.

If Apple decided that people were only allowed to put their Phone in their left side jeans pocket, would that be acceptable to you? Of course not. So Apple saying that only Apple Pay can use NFC should be viewed the same way.

Remember all of the Apps within the Walled Garden of Cupertino undergo full screening, so it's not like you're suddenly going to end up with malware slurping your account through some dodgy App off the Appstore. But maybe you want to use your Banks direkt App over NFC instead of ApplePay, because of some new deal or whatever. Or maybe you want to use the NFC for something else (for example, unlocking a door using your phone, just like a badge reader), at present you cant because Apple has locked it. But it's your phone, so why cant you, if you want to, use that NFC for other things.

What you do with your phone is up to you, try not to forget that. Any time a company tries to tell you what you can do with the items they produced, but which you paid for, then you should be telling them to pi$$ right off. Once you've paid for it, it's yours. Dont forget that...

[Anonymous Coward]

Re: I agree

“ And this is where you're wrong. The moment you bought it, it's not Apple's Hardware. It's yours!”

Good point, well made.

[big_D]

The bank is legally bound not to use or sell my transaction details. Apple not so much, they say they won't, but who knows what they do with the information. The same for Google Pay.

If I use my bank payment app, the whole chain stays with the card processor and my bank. With Apple Pay, Apple stick themselves in the middle.

In countries where banks aren't so strictly regulated, the extra step of everything going through Apple might be useful, but where banks are sworn to more secrecy than Apple, that is another weak-point in the chain.

The more links in the chain, the more points where something can go wrong or be leaked.

[codejunky]

@skwdenyer

"I’m probably unpopular, but I don’t see any foul here."

I am happy to see your comment. If this was an issue people wouldnt buy apple, the customer is free to choose. The best part is that Apple is more expensive and known to be a closed system so it takes a very deliberate choice on the customers part to buy an Apple.

[ecofeco]

I never get tired

I never get tired of the EU teaching American corporations how to be civilized.

[msknight]

Pay now, win later

Apple can keep paying whatever fine they say, as long as it keeps doing what it's doing. Then it will likely win in the long run as competition continues to be locked out of its ecosystem and other battles are fought and won around it. Unless the EU force Apple to change the way they work then... er... nothing will change.

These transaction systems are already costing us because retailers have to put the prices higher to cover the cost of doing business. So ultimately I'm paying for all these shenanigans even though I don't use Apple Pay or any of its mobile-phone-based competitors. It's bad enough that I have to use credit/debit cards for which there is a charge to the retailer to keep the infrastructure running. That's a transaction charge which I could otherwise be saving.

[teomor]

I don’t get it. They can decide to take the chip out and no one can do anything about it, because it’s their hardware, but if they put it in, it has to work with all other payment systems? What is the logic here?!

[lglethal]

Let's all say this again. It is not Apple's Hardware! It is yours!

If you choose to install a different App to make use of the NFC, that is your call. Apple should keep their stinking noses out of it.

If you can only listen to music over the 3,5mm jack, sorry Airpods, since they removed the headphone jack, through itunes, and no other music service could play music over your Airpods, would that be acceptable? No Spotify, No Youtube, no using other media players. Itunes, or no music? I'm asking seriously, would that be acceptable to you?

Because if not, then that is exactly the same situation as the NFC. Your hardware, you get to choose what you do with it.

Oh and no they cant take the chip out after you've bought the phone, unless you take it to a Genius bar (Oxymoron that one), and let them take it out. If they cripple it over a software update, they would be open to being sued for removing functionality after purchase. If you mean, they can release a new phone model without the chip, then of course but then you are buying the hardware without the chip and accepting that, so of course you cant complain in that case. But this case is very different.

[yetanotheraoc]

He meant they can take the chip out before you bought the phone.

They can make a phone with different capabilities, you choose whether or not to buy it based on what it says on the tin. If you want to use a different payment method besides Apple Pay, you don't buy an iPhone. Simples.

Example: my first mobile was CDMA only, didn't work in Europe. If I wanted to make calls in Europe, I would have purchased a different phone. Which was certainly an option, just not an option with my provider. Did EU force my provider to "open up" the phone to allow GSM calls? They could have, the same phone from a different provider could do GSM calls, it was only provider software that stopped it working on my unit. But the EU didn't care, for two reasons: (1) There were enough other options. (2) There wasn't enough money involved.

Most customers want more choices, can't argue with that. A few customers like that iOS is locked down, hmmm, have to think about that one. But in my view "wanting more choice" is not a legal basis for forcing Apple to open up the chip. Squashing anti-competitive behavior is a legal basis, the end result will be more choice. In my mind a walled garden is not automatically a monopoly. Both reduce end user choice, but that's not the test.

[yetanotheraoc]

£££€€€$$$ > logic

[ZeroPete]

My 2 Eurocents

As an EU tax payer I think I'm entitled to an opinion here.

From all the fines the EU doles out for 'anticompetitive behaviour', 'consumer rights violations', 'unrightful gouvernment subsidies' and what have you not a single penny ever goes back to the citizens they are supposed to protect. The money does however end up in their own pockets for subsidizing their endless junkets, back and forth travel from Brussels to Strasbourg, bloated administrations, and generally other toys designed to line their own pockets by screwing over the people they're supposed to protect.

The Apple Walled Garden (c) may or may not be in violation of Euro legislation, but that is not going to benefit you or me.

Pete