The UK's competition watchdog is consulting on proposals to unlock contactless technology on iPhones, making it easier for Apple Pay rivals to flourish by lowering fees and removing technical barriers.
Editorial
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Following years of pressure from banks, fintechs and regulators, in 2024 Apple agreed a deal with the European Commission to open up the NFC chip technology that enables iPhone users to make contactless payments to third-party providers. Facing similar regulatory pressure in the US, the tech giant then promised to give developers in host of other countries - including the UK - access to the technology.
However, the firm also said would charge associated fees in markets outside of the EU and is also only granting NFC access via the device-based Secure Element (SE) standard, not the off-device Host-based Card Emulation (HCE) option.
Having said last year that it would investigate the issue, the Competition and Markets Authority has now published its proposals for consultation.
While Vipps, PayPal, Klarna, Curve, and BBVA have all launched alternative payment apps for iPhones in the EU, not a single firm has launched a wallet-type product to compete with Apple’s in the UK, notes the regulator. This, it says, is because Apple’s fees and rules are blocking UK fintechs and other businesses from innovating and growing.
The CMA proposals would require Apple to provide access through both the main contactless technology standards - SE and HCE - used internationally. This would not raise any "inherent security concerns" and would support the "widest range of innovative use cases".
On cost, the CMA is not proposing to set the price and terms of contactless functionality access. Instead, it has proposed principles for how this should be determined, with the expectation that charges would be "substantially lower" than Apple’s current fees while still fairly rewarding Apple for providing access.
Sarah Cardell, chief executive, CMA, says: "We have heard that high fees, strict terms, and technical restrictions relating to Apple’s contactless technology make it too difficult for challengers to innovate and compete.
"By removing barriers to entry, we can help create the conditions for brilliant British businesses with great ideas to develop new products and services here - from payment apps and digital IDs to travel passes and digital keys."
However, Apple continues to raise objections to the HCE access, with a spokesperson telling Reuters: "We do not believe the CMA should require Apple to adopt an approach with lower privacy and security protections. We will continue to engage constructively to reach an outcome that is in the best interest of our users."
In contrast, David Tirado, chief commercial officer at Revolut, has welcomed the CMA proposals: "Revolut strongly welcomes the CMA’s decision to open NFC access via HCE functionality. Opening up this infrastructure is a critical step towards driving genuine competition and helping the UK’s payments sovereignty.
"The CMA’s direction creates a real opportunity for UK fintechs to compete on an equal footing with Big Tech, and we look forward to engaging with the CMA during the consultation to ensure the final framework delivers real competition for UK consumers."