UK regulator urges Apple to cut fees and open payment tech

The Competition and Markets Authority has proposed measures to compel Apple to widen access to its contactless payment technology and substantially reduce the fees it charges firms. The regulator believes the current arrangements are blocking financial technology companies and other businesses from innovating and growing. It argues that removing these barriers would allow UK smartphone users to benefit from a broader range of payment, ticket, and travel applications.

Apple has responded by maintaining that widening access could undermine security standards. The company stated that its existing arrangements already permit developers in the UK and globally to securely offer contactless transactions within their apps. These services range from in-store payments and transit passes to car keys and event tickets. Apple contended that its solution facilitates competition between digital wallets while ensuring that sensitive user data remains protected by the highest security standards. The firm expressed its view that the regulator should not require an approach with lower privacy and security protections.

The CMA noted that nearly two in five payments are now contactless, with nearly 60% of people using digital wallets. Apple’s wallet is described as the most popular in the UK. The proposed measures would force Apple to grant access to apps that make payments via a widely used alternative contactless technology standard called Host Card Emulation. Apple does not currently permit this standard in the UK. The regulator emphasised that it is not proposing to set the specific price and terms Apple could demand, but the effect of the plans would be that prices fall.

Sarah Cardell, Chief Executive of the CMA, said she had been told that high fees, strict terms, and technical restrictions made it too difficult for challengers to innovate. She stated that removing barriers to entry would help create conditions for British businesses to develop new products and services. The CMA highlighted that the UK is one of the world’s leading fintech hubs, generating more than £214 billion in turnover and supporting more than 360,000 jobs. It argued that Apple’s current rules are restricting growth and innovation in this sector.

The regulator pointed to developments in the European Union, where moves to open up the technology resulted in the creation of new businesses. In the six months since the EU forced Apple to widen access, alternative payment apps such as Vipps, PayPal, Klarna, Curve, and BBVA launched. Apple argues, however, that these new apps could easily have been launched prior to the changes. In contrast, the CMA noted that not a single firm has launched a wallet-type product to compete with Apple’s in the UK. The regulator distinguished its approach from the EU, stating it is focused on ensuring the interoperability of particular aspects of Apple’s tech, such as digital wallets and watches.