Apple Raised UK Banking Costs, Lawsuit Alleges

[MacRumors]

A new UK class action lawsuit against Apple seeks billions in damages by alleging that the company unlawfully restricted competition in contactless payments on the iPhone through Apple Pay, The Guardian reports.

The proposed opt-out collective action filed this week in the UK alleges that Apple abused its position in the market by limiting access to the iPhone's near-field communication (NFC) technology and charging fees to banks for the use of Apple Pay. The claim seeks up to £1.5 billion (approximately $2 billion) in damages on behalf of an estimated 50 million UK consumers.

The complainant argues that Apple Pay has effectively been the only contactless mobile payment option available to iPhone users in the UK since its launch in 2015. According to the filing, Apple declined to grant third-party developers access to the iPhone's NFC hardware and Secure Element, preventing rival wallets from operating on equal terms and leaving banks and card issuers with no alternative but to participate in Apple Pay if they wished to offer mobile contactless payments to iPhone users.

The case heavily focuses on fees Apple reportedly charges issuing banks for Apple Pay transactions, commonly cited in industry reporting as approximately 0.15% of the transaction value in the UK. These fees are allegedly not consistent with industry norms and were only possible because Apple restricted competition on its platform. The suit further contends that banks passed the costs of those fees on to consumers through higher charges across a wide range of financial products, including current accounts, credit cards, savings accounts, and mortgages.

Around 98% of UK consumers hold accounts with banks that support Apple Pay and were therefore exposed to higher costs regardless of whether they personally used the service. On that basis, the claim seeks damages on a population-wide basis. The average payout per affected consumer would be relatively modest, estimated at roughly £26 to £35 if the claim were successful.

In a statement, Apple said that the lawsuit was "misguided and should be dismissed," adding:

Apple Pay is a seamless and secure way for users to make contactless payments, and one of many payment options available to consumers. Apple does not charge fees to consumers or merchants for using Apple Pay, and banks see meaningful benefits from offering Apple Pay to their customers - most notably fraud reduction.

Apple also emphasized changes to its platform that have occurred since the period covered by the claim. The company said it has recently expanded access to key technologies, including NFC and the Secure Element, allowing third-party developers to offer contactless payments within their own apps in the UK.

The claim has been lodged with the Competition Appeal Tribunal, which must determine whether the case can proceed as a collective action.

Note: Due to the political or social nature of the discussion regarding this topic, the discussion thread is located in our Political News forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Article Link: Apple Raised UK Banking Costs, Lawsuit Alleges

 

[I7guy]

Good luck in winning. Although it is the UK. Next up. Class action lawsuit because iPhones are locked down to iOS.

 

[cjbryce]

This is, IMVHO, a frivolous lawsuit aimed at a respondent with deep pockets. I hope it's chucked out very quickly.

Many years ago I was in charge of a project for major UK banking institution to look at the future of the payments business landscape. After about a year's worth deep research my report suggested that other banks weren't really innovators in terms of competition but rather that Apple and Google would enter the payments market and become major players in that space. I and my team were laughed out of the room.

The banks have no-one to blame but themselves.

 

[germanbeer007]

UK fans are such complainers

 

[justanotherdave]

I don’t recall card processors changing their fees when Apple Pay was released. The rumored 0.15% fee is trivial compared to the usual 3% (or more) card processing fees, and the reduction in fraud would almost certainly have more than made up for the tiny difference.

They know this which is why they’re trying to claim Apple Pay is the reason OTHER products had price increases (like interest on loans/cards or account fees).

What a joke of a lawsuit.

 

[paulovsouza]

Next UK will sue Apple for using the Apple logo, due to the declining sales of the fruit it’s based off of.

I’m very pro competition, and limiting big companies. But again Apple made the platform and its user base. Why is it punished for having success in what it’s created. Visa and MasterCard also have fees, Samsung Pay.

Then the UK becomes more of a liability, and cost for Apple and they pull out of the country, then there’s truly no competition.

 

[PJWilkin]

Utterly frivolous lawsuit
It’s a money grab by the lawyers etc

I’ve used ApplePay since first released, and prefer it over the physical cards

They can’t actually claim for the number of people as not all those have Bank Accounts, or even iPhones

And claiming it hurt consumers is a big ask, it’d have to prove banks increased charges etc solely because of Apple

 

[Bakey]

UK fans are such complainers

What does that even mean?! 🤷‍♂️

 

[jarman92]

Won’t anybody think of the banks’ bottom lines?!

 

[CalMin]

I think the reduction in fraud is a tangible benefit to banks. With Apple pay a merchant never sees the actual card number being used, so they can't copy your details and go shopping with them later or, worse, keep them on file somewhere for some bad perp.

There's a value to that for merchants and banks. My folks run a small business selling healthcare related stuff for the elderly. The amount of fraud they've seen over the years is shocking. And we all pay for the fraud.

 

[JMalone]

Bankrupt country that hasn’t innovated since the days of Thatcher and is quickly becoming a third world theocratic dumpster full of extremists and terrorist scarf wearing lunatics.

Lawyers launch use cases just to fill their pockets and then send the money to their bank accounts in a tax haven because they are trying to escape that hero to zero country.

 

[turbineseaplane]

In case anyone needs a reminder, the UK is not in the EU anymore.

😂

 

[Chazak]

Bankrupt country that hasn’t innovated since the days of Thatcher and is quickly becoming a third world theocratic dumpster full of extremists and terrorist scarf wearing lunatics.

Lawyers launch use cases just to fill their pockets and then send the money to their bank accounts in a tax haven because they are trying to escape that hero to zero country.

Tell us what you know about the money laundering you describe. Looking for facts my friend ... if you have them.

 

[polyphenol]

A far more significant issue is that the banks have allowed Visa and Mastercard to dominate credit and debit card transactions forever. With all the costs, and with control vested in the USA.

And they've allowed PayPal to grow.

I've managed to avoid all PayPal recently.

Apple might not have opened access to NFC and the Secure Element, but how hard did anyone actually try to overcome that?

When I had some sort of hack on my account, the bank was able to get Apple Pay working in no time - effectively sending new details. Far faster than they could ever have sent out a physical card! (As so often, I never did really find out what had happened.)

At the time, I had not been using Apple Pay for long, but that single fact made me switch entirely.

 

[JMalone]

Tell us what you know about the money laundering you describe. Looking for facts my friend ... if you have them.

Qatari ministers openly brag on Qatar TV that they have bought British and American politicians and journalists.

They turn parts of UK and US into a third world commie hellhole by sending theocrats to loot the system. The politicians and journalists they bought keep you distracted with culture wars. If you complain they gaslight you and call you nazi or racist even if you Asian or Black.

While they turn those parts of the west into a third world they invite rich westerners to buy houses in Qatar. It’s a clever scam. They ruin your country and then sell houses to the people who want to escape.

The Iranian regime tries the same thing. One Iranian minister was crying like a baby on TV in December because he spent millions of dollars to bribe and convert Japanese journalists and citizens and after spending so much the only person they converted was an illegal delivery driver from India. He’s so stupid. He tried to corrupt the most high IQ country in the world.

 

[Unregistered 4U]

I think the UK should lose because then it would force them to compete by designing, producing and releasing a better product. As long as Apple’s seen as an easy way to increase revenue via fees, they will continue to be hopelessly tied to the company which, on several accounts, they’ve made it clear that it does not operate in the way they’d prefer.

Then they could make Apple mobile devices illegal and drive that UK based phone manufacturer to success. Never again would there be concern over the business practices of Apple in this area.

 

[gaximus]

I’m confused by this, it’s their phone why do they have to give access to their features. Can I sue Bank Of America because my credit card only allows me to purchase using my BoA account. I should be able to use that card to purchase with Chase bank as well.

 

[SBlue1]

This is, IMVHO, a frivolous lawsuit aimed at a respondent with deep pockets. I hope it's chucked out very quickly.

Many years ago I was in charge of a project for major UK banking institution to look at the future of the payments business landscape. After about a year's worth deep research my report suggested that other banks weren't really innovators in terms of competition but rather that Apple and Google would enter the payments market and become major players in that space. I and my team were laughed out of the room.

The banks have no-one to blame but themselves.

I feel you. German banks were dinosaurs too. But Apple blocked everybody out, even innovative new banks and PayPal for a long time without any valid reason.

 

[iGeek2019]

Utterly frivolous lawsuit
It’s a money grab by the lawyers etc

I’ve used ApplePay since first released, and prefer it over the physical cards

They can’t actually claim for the number of people as not all those have Bank Accounts, or even iPhones

And claiming it hurt consumers is a big ask, it’d have to prove banks increased charges etc solely because of Apple

Plus not all card companies even support Apple Pay here in the UK 11 years later (yes, I’m looking at you Capital One UK!)

 

[DougieS]

Plus not all card companies even support Apple Pay here in the UK 11 years later (yes, I’m looking at you Capital One UK!)

They do support Apple Pay: https://www.capitalone.com/digital/tools/digital-payments/apple-pay/

Just certain partners may choose to disable it

Apple Pay is currently available for most Capital One credit and debit cards. It is not available for all of our partner cards.

Edit: Just realised this is the US site, can't find anything for UK

 

[ThomasJL]

Around 98% of UK consumers hold accounts with banks that support Apple Pay and were therefore exposed to higher costs regardless of whether they personally used the service.

How can anyone read that sentence and still side with Apple?

I guess it’s not surprising though. Many people, especially in the U.S., have more sympathy for the ultra-wealthy than they do for ordinary people. Ayn Rand would be proud.

Tim Cook is a bankster.

 

[justanotherdave]

How can anyone read that sentence and still side with Apple?

I guess it’s not surprising though. Many people, especially in the U.S., have more sympathy for the ultra-wealthy than they do for ordinary people. Ayn Rand would be proud.

Tim Cook is a bankster.

How can anyone read that sentence and believe that banks raised costs of all their other services because of Apple Pay, and not because banks are greedy.

 

[mike...]

How can anyone read that sentence and still side with Apple?

I guess it’s not surprising though. Many people, especially in the U.S., have more sympathy for the ultra-wealthy than they do for ordinary people. Ayn Rand would be proud.

Tim Cook is a bankster.

Because most UK banks don't charge their customers anything for spending or withdrawing their money.

ApplePay has cost me £0.

 

[polyphenol]

I’m confused by this, it’s their phone why do they have to give access to their features. Can I sue Bank Of America because my credit card only allows me to purchase using my BoA account. I should be able to use that card to purchase with Chase bank as well.

It would be OK if Apple restricted access to the compass and GPS so that apps could not make use of that data?
It would be OK if Apple restricted access to the microphone and speaker?
It would be OK if Apple restricted access to the accelerometer?
It would be OK if Apple restricted access to the atmospheric pressure?
It would be OK if Apple restricted access to Bluetooth?

It is my phone, owned by me. It is not their phone.

The "their phone" argument is concerning if you get your phone through a company which retains ownership (e.g. mobile networks and possibly some credit arrangements).

However, without knowing more, it is difficult to know if Apple have any legitimate reason to restrict access to their software and thus limit use of NFC. I can see arguments in both directions. I would not want any old app able to access NFC.

 

[Sophisticatednut]

Good luck in winning. Although it is the UK. Next up. Class action lawsuit because iPhones are locked down to iOS.

I don’t recall card processors changing their fees when Apple Pay was released. The rumored 0.15% fee is trivial compared to the usual 3% (or more) card processing fees, and the reduction in fraud would almost certainly have more than made up for the tiny difference.

They know this which is why they’re trying to claim Apple Pay is the reason OTHER products had price increases (like interest on loans/cards or account fees).

What a joke of a lawsuit.

Well fees where 0.2-0.3~ < by EU law before brexit, with it increasing 1.5-3%~ in some cases afterwards.

It might have some merit if the banks where not able to raise the fees to cover ApplePay and therefore extract it in some other manner. If it’s allowed to go in to discovery we can find out more details about the payment schemes and if the banks are the ones putting smoke up their ass or not.