For four years, Apple has been making its case to the EU that it is not monopolising the payments and technology markets by restricting who can use its tech. In order not to face heavy fines, Apple has allowed its rivals access to its tap-and-go payments technology through its NFC chip, free of charge. But how impactful will this be on the payments market and what consequences might Apple face as a result?
Apple has been a front-runner in the payments space for a long time, and this was closely monitored by EU regulators. So much so, that in 2020 the EU formally launched an investigation into the firm’s payment method and how it could be integrated into apps and websites. Especially following alleged refusals from site about accessing Apple Pay.
As the case of antitrust continued, the EU found that Apple was able to restrict competition as it wholly owned its ecosystem meaning Apple Pay was the only option for its users. Therefore, at risk of facing heavy fines, Apple declared that it would give rivals access to its contactless payment and mobile wallet technology. This was market-tested by the European Commission, allowing it to give Apple feedback on its commitments.
In an official statement by the EU, it said “Apple abused its dominant position by refusing to supply the NFC input on iOS to competing mobile wallet developers, while reserving such access only to Apple Pay.”
In a bid to show it is not monopolising its ecosystem, Apple has announced that competitors will have access to its NFC technology, free of charge.
Is there much change from a consumer’s standpoint?
Research from takepayments, the UK card payments solution, explored how much consumers were using mobile wallets and Apple Pay to pay for products in person and found it to be the second highest payment method (20 per cent), only behind contactless payments (48 per cent). But would this change with more mobile wallet payment options?
Ivo Gueorguiev, co-founder and executive chairman of Paynetics
According to Ivo Gueorguiev, co-founder at Paynetics, the payments service provider, probably not. “The impact of Apple’s news on card users will be minimal, as the mandated change aims to create a more balanced competitive environment where providers have alternative ways of tokenising cards.”
Nonethess fintechs are in a prime position to capitlaise on Apple’s announcement. Explaining how, Gueorguiev continued: “Businesses must develop advanced payment solutions beyond what’s currently available. Enhanced tap-to-pay and improved card acceptance on iPhones are areas to watch.”
Ryta Zasiekina, founder of fintech company CONCRYT
In a similar vein, Ryta Zasiekina, founder of fintech company CONCRYT added: “Many fintechs will now be scrambling to launch their own versions of ApplePay that can enhance the customer experience by providing a greater choice of seamless and widely accepted payment methods. But using the newly-shared technology to create a cookie-cutter copy of ApplePay will not be enough to tempt notoriously loyal Apple customers into using another brand of digital wallet.
“Capitalising on the NFC tech successfully will mean developing truly innovative uses cases that will add real value. For example, leveraging NFC for event ticketing, or to create secure access control solutions for offices, buildings, or even vehicles. It will be fascinating to see how many fintechs take this technology, and how far they run with it.”
A diversifyed market
By releasing its NFC chip to the world, Apple is giving fintechs the building blocks to create new and innovative solutions. These in turn, could greatly diversify the payments market.
Meryem Habibi, chief revenue officer at Bitspace
Commenting on this Meryem Habibi, chief revenue officer at Bitspace, the blockchain and investment firm, said: “The Apple brand obviously has huge customer loyalty and a seamless ecosystem, so other card issuers are in a sense playing catch up. This development may make the challenge even tougher and, on the surface, seem to hinder progression of a democratised market.
“But innovating user-friendly tap-and-go payment solutions aren’t exclusive to the capabilities of Apple. Other card issuers should now be encouraged to make their own advances with a competitive spirit. If they do, the benefits could be huge in terms of diversifying the market and lowering user costs across the board.
“Apple’s announcement opens the door for exciting developments in the space for sure. Contactless transit payments, secure access control, and even broader IoT applications could evolve and truly transform the payments landscape in ways we haven’t seen before.”
Alex Reddish, MD, Tribe Payments
The funds saved from no longer paying for the technology could be the key to new innovations explains Alex Reddish, managing director of UK fintech company Tribe Payments.
“Now that third-party developers can access Apple’s NFC and iPhone features like Face ID without being charged, it creates a springboard for even more payments innovation. We could be on the verge of wallet-as-a-service providers becoming a major spoke of the fintech ecosystem.
“We must hope that any cost savings will actually be invested in research and development, rather than following a pattern similar to the Interchange Fee Regulation where expected merchant savings didn’t always translate to consumer benefits.”
Change is on the horizon
Michael Seaman, CEO and founder of Swipesum
Although Apple has now made its NFC tech available, firms have already been working on similar offerings. However, according to Michael Seaman, CEO and founder of Swipesum, the payment processor, this move will not only benefit competitors but Apple itself too, providing the right education is in place.
“At Money 20/20 and other major finance events, new startup companies have already been showcased that have a focus on trying to replicate Apple’s success with NFC tech. Visa and Mastercard offer a Tap-to-Phone suite to enable Fintechs to build their own solutions. User adoption is key. Both Apple and fintechs need to invest in educating consumers about the benefits of NFC payments to drive widespread usage. When these elements come together, Apple’s position will not only be secure but also potentially even stronger.”
Sean Gelles, senior director payments intelligence at J.D Power
Other countries may follow suit too. Sean Gelles, senior director payments intelligence at J.D Power, the data analytics firm explains: “Though these changes are currently limited to the EU, Apple is also under scrutiny from US regulators, which means similar changes in the US could be on the horizon.
“Fintech payments players will be able to reach a much broader consumer base but the challenge will be positioning their products as more innovative than Apple’s – a daunting task given that Apple consistently ranks high on perceived innovation in both years of our U.S. Digital Wallets Satisfaction Study.“
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