ECB queries Apple’s promise to open up iPhone payments

ECB queries Apple’s promise to open up iPhone payments

A promise made by tech giant Apple to open up its iPhone payments service - after a preliminary finding by the European Commission that its behaviour was restrictive - don’t go far enough, the European Central Bank has said, in remarks that represent an unusual foray into antitrust policy.

In January, the tech giant proposed to let alternative providers access the near-field communication (NFC) chip that lets users buy goods with just a tap of their iPhone.

But they exclude ecommerce, transactions among friends, and wearables like the Apple Watch, said the ECB – which is currently developing its own innovative payment service known as the digital euro.

“The current proposed commitments fall short of ensuring a truly equal level playing field for a third-party payment solution in terms of end-user experience,” the ECB’s Piero Cipollone told EU Competition Commissioner Margrethe Vestager in a letter dated Friday (19 April).

Without giving rivals full access to core iPhone hardware, the user experience will still be “not at par” compared to those using the proprietary Apple Pay service, Cipollone said, meaning digital euro iPhone payments might not be fully seamless and user friendly.

Apple agreed to new pro-competition measures in January, after banks and other rivals argued it was unfair they were forced to use software controlled by the tech giant.

EU officials are now contemplating whether to accept those commitments, whose breach could then result in a mammoth fine worth 10% of Apple’s worldwide turnover.

The payments market, dominated by major US credit card companies, has long been a source of antitrust concern, and existing EU laws cap the fees that Visa and Mastercard can impose.

Cipollone is also currently contemplating whether to issue the euro in a new form, giving digital payments the same status as transactions using notes or coins.

In June 2023, the Commission proposed a new law to underpin that digital euro – though its provisions, which include pro-competitive rules on smartphone hardware, won’t be agreed before elections due in June.

A spokesperson for the Commission said it “will take utmost account of the ECB’s sumission,” as part of a consultation opened in January.

“We welcome the feedback and support of other European institutions,” the spokesperson said, adding that antitrust concerns relate to the “specific use case” of using NFC mobile wallets at point-of-sale terminals.

A spokesperson for Apple did not immediately respond to requests for comment.