The Consumer Financial Protection Bureau (CFPB) has taken a strong stance against Apple’s policy of limiting access to the NFC chip technology that facilitates payments for iPhone users.
Currently, Apple Pay is the only mobile payment service allowed to utilize the NFC ‘tap and go’ technology on iOS devices, a restriction that has drawn criticism from banks and payment providers in various regions for stifling competition with their proprietary applications.
Last year, the European Commission charged Apple with limiting access to the NFC chip, a move that could result in fines totaling billions of euros. The CFPB recently highlighted this issue in an “Issue Spotlight” report, comparing Apple’s restrictive approach to the more open policies of Google, and situating it within the broader context of America’s transition to open banking and the significance of platform interoperability.
According to the report, the use of tap-to-pay solutions in the U.S. is expected to reach $179 billion this year, encompassing Apple Pay, Samsung Pay, and Google Pay. As of April 2023, nearly half of iOS users—approximately 55.8 million—had made in-store payments using Apple Pay.
The CFPB emphasizes that the restrictions imposed by Apple on other companies’ access to the NFC chip are substantial. Banks, retailers, and payment services like PayPal and Square are eager to create tap-to-pay applications for Apple devices, but Apple’s policies hinder this development and ultimately limit consumer choice.
The report suggests that if Apple faced competition, it could drive all payment providers to innovate and develop new features to retain their customer base. The CFPB criticizes Apple’s justification for its restrictions, which claims to prioritize privacy and security, arguing that third-party payment apps could simply be required to meet comparable standards of privacy as Apple Pay.
Moreover, the report warns that barriers to NFC access could hinder the advancement of open banking, negatively affecting consumers by reducing competition, innovation, choice, and accessibility. It concludes with a call for close examination of policies that impose competitive restrictions and increase consumer switching costs.