A class-action lawsuit in federal court accuses Apple of using its Apple Pay to illegally profit from payment card issuers, taking in $1 billion a year in fees in violation of antitrust laws.
The suit, filed Monday (July 18) by the Seattle firm of Hagens Berman and Sperling & Slater, seeks to represent a class of credit unions and financial institutions in the U.S. that issue cards designed to be used with Apple Pay.
“In the Android ecosystem, where multiple digital wallets compete, there are no issuer fees whatsoever, ” said the complaint, filed in U.S. District Court for the Northern District of California. “The upshot is that card issuers pay a reported $1 billion annually in fees on Apple Pay and $0 for accessing functionally identical Android wallets. If Apple faced competition, it could not sustain these substantial fees.”
Apple was not immediately available for comment Monday.
The suit also accuses Apple of monopolizing the market for tap and pay mobile wallets on iOS. By blocking competitors from this market, the complaint said, issuers are forced to pay fees they wouldn’t have paid if the market were more competitive.
“If there were multiple Tap and Pay iOS Mobile Wallets, the competing firms would need to innovate to differentiate their offerings, for example by improving the security of transactions,” the complaint said.
“Consumers and issuers have been deprived of that innovation and differentiated choice among market alternatives. Competition would also increase output, because even more issuers would enroll in Tap and Pay iOS Mobile Wallets if the cost of doing so were lower.”
The suit seeks reimbursement of Apple Pay fees to payment card issuers.
Last month, PYMNTS reported that Apple was concerned that pending antitrust regulation focused on broadening the app store market will make iPhones less secure.
The company maintains that outside apps would make iPhones vulnerable to scams and malware, while antitrust advocates and cybersecurity specialists say Apple is more worried about protecting its business model.