Apple sued over the Apple Pay payment system
Apple has been hit by a lawsuit in the US over Apple Pay.
The tech giant is accused of using its market power in the mobile phone industry to fend off competition from other payment card issuers.
The class action complaint was filed in federal court in California by Affinity Credit Union, a chartered credit union based in Iowa.
Apple did not immediately respond to the BBC’s request for comment.
According to the complaint, Apple “forces” consumers who use its smartphones, smartwatches and tablets to use their own wallet for contactless payments, unlike Android device makers who allow consumers to choose wallets such as Google Pay and Samsung Pay .
The complaint alleges that Apple is preventing consumers from using competing mobile wallets capable of offering competing payment solutions with the touch of a phone.
Iowa’s Affinity Credit Union said Apple’s anti-competitive behavior has forced more than 4,000 banks and credit unions that use Apple Pay to pay at least $1 billion in overpayments annually for the privilege.
He also said Apple’s behavior minimized the incentive for the California company to make Apple Pay work better and be more resilient to security breaches.
“Apple’s conduct harms not only issuers but also consumers and competition as a whole,” Affinity Credit Union said.
“If Apple faced competition, it would not be able to sustain these substantial fees.”
The suit seeks unspecified damages and an end to Apple’s alleged anti-competitive conduct.
More legal battles
Apple already faces a possible hefty fine after European Union regulators said on May 2 that it abused its dominance in iOS devices and mobile wallets by refusing to give payments rivals access to its technology.
According to the complaint, Apple charges issuers a 0.15% fee for credit transactions and a flat fee of 0.5 cents for debit transactions using Apple Pay, while Android competitors charge nothing.
The plaintiff is represented by the law firms Hagens Berman Sobol Shapiro and Sperling and Slater.
Last August, they helped win a $100 million settlement for smaller iOS developers who claimed Apple overcharged them in commissions.
Discussing the European Union’s investigation into Apple’s mobile payments policy in May, the bloc’s digital chief Margrethe Vestager said Apple claimed it could not provide access to NFC for security reasons.
In Europe, most in-store payments made by mobile phone rely on a wireless technology called “Near Field Communication” – NFC.
This feature enables communication between the customer’s mobile phone and the store’s payment terminal – enabling “tap and go”.
“Our investigation so far has not revealed any evidence that would point to such a higher security risk,” Vestager said on the EU’s website.
“To the contrary, the evidence in our file suggests that Apple’s conduct cannot be justified by security concerns.”
So does Google
Allegations that Google overcharged millions of UK app users will also go to trial.
The lawsuit was brought by consumer campaigner Liz Coll on behalf of almost 20 million UK Google Play store users.
It aims to compensate British users of Android smartphones and tablets for years of alleged price gouging by Google and breaches of competition law.
She said: “We are confident that our claim is correct.
“The Google Play Store’s imposition of a headline 30% charge on our digital purchases is illegal and unjustifiable and we look forward to fighting for UK consumers in court.”
Google said it would defend its claim.
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