Regulators in the UK are pushing Apple to open access to its contactless payment technology, allowing users to tap into new payment, ticketing, and travel apps.
The nation’s Competition and Markets Authority (CMA) says Apple’s current fees and charges are stifling innovation among fintechs. The European Union already allows developers to request access to Apple’s near-field communication (NFC) technology, provided they meet industry standards and hold the necessary licenses to process consumer payments.
Since Apple agreed to open up its technology for payments in the EU, Vipps, PayPal, Klarna, Curve, and BBVA have launched alternative payment apps. But following Brexit, the UK is no longer subject to the bloc’s regulations.
Unlocking Interoperability
The CMA says its proposals aim to improve interoperability across Apple’s digital wallets, watches and other devices. Under the plan, Apple would have to grant access to apps using an alternative contactless technology standard known as Host Card Emulation (HCE). This would allow third-party apps to support tap-to-pay transactions and competing digital wallets to operate on the iPhone alongside Apple Pay.
“The CMA wants Apple to unlock the chip so that airline apps, for example, can take payments directly and not via Apple Pay,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “You would tap your card on the phone to buy tickets in the airline app vs using Apple Pay. This lets the merchant avoid the extra fees of Apple Pay, but doesn’t offer a lot of added utility for the consumer.”
Privacy and Security Concerns
Contactless payments have become increasingly popular in the UK, accounting for 39% of all payments, up from just 3% a decade ago. More than 60% of adults use a digital wallet, with Apple Wallet being the most popular option.
Initially, the iPhone’s NFC chip supported contactless payments only through Apple Wallet, although third-party apps could access the chip for other purposes. That restriction has since been eased in the EU, but remains in place the UK.
In a statement to the BBC, Apple said developers in the UK and elsewhere can already offer contactless transactions within their iPhone apps. The company warned that adopting the CMA’s proposals would result in “lower privacy and security protections.”