Since the launch of the iPhone 6, all subsequent models of the Apple smartphone have enabled contactless payments with the Apple Pay mobile wallet using near field communication (NFC).NFC) technology.
And unlike Android phone users, iPhone users have no alternative options if they want to make NFC payments, as the terms of the Apple Developer Agreement prohibit third parties from using the iPhone’s NFC chip in this way.
We would definitely like to use an NFC antenna for a smoother payment process […] Hopefully, the European Commission can somehow get Apple to open up the infrastructure so we can use NFC. For this to happen we use QR codes […] But if I could choose, I’d prefer NFC.”
The good news for MobilePay and other European mobile wallets is that two regulatory developments in the EU may force the changes Bunkenborg hopes will happen.
The first is an ongoing antitrust investigation, which the European Commission (EC) opened into Apple Pay in 2020. On comments On the progress of the investigation in May, EU Competition Commissioner Margrethe Vestager clarified that Apple’s stranglehold on iPhone NFC use fell short of the EC’s standards of fair play.
It accused the company of building a “closed ecosystem” around its hardware and operating system, and said that “by excluding others from the game, Apple has unfairly shielded its Apple Pay wallet from competition. If proven, such behavior would amount to an abuse of dominant position.” , which is illegal under our rules.”
In her speech, Vestager also noted that the European Union Digital Markets Law The DMA, which was formally adopted by the European Parliament this month, will directly affect the digital payments market in the EU and the European Commission’s Apple Pay investigation will inform future implementations of the regulations.
Vestager’s statements are telling, as Apple is one of the few companies likely to be designated as “gatekeepers” under the DMA.
While companies will not be notified that they have been appointed gatekeepers until six months after the DMA goes into effect, the high limits set by the regulations in terms of revenue and user base mean that only the largest companies, such as Google, Meta, Amazon and Microsoft, can qualify.
While many aspects of DMA will affect Apple’s European business model, Section 52 explicitly names NFC as one of the hardware components to which gatekeepers have restricted access.
The passage concludes that gatekeepers should “be obligated to ensure access under equal conditions to, and interoperability of, the same operating system, hardware or software features, provided or used in the provision of any additional services by the gatekeeper.”
DMA notes that denying third-party access to specific technology functions such as NFC stifles innovation and limits consumer choices.
Similarly, Vestager stated that “the potential for innovation in this space is huge. But that innovation has been blocked by Apple denying others access to NFC on their devices.”
Big tech companies are having to adapt
With Apple’s share of the European smartphone market nearing 40%, the global tech company has no choice but to play by EU rules, as evidenced by comments the company’s vice president of global marketing, Greg Joswiak, made recently to Wall Street Journal.
In response to a question whether Apple will switch from its charging system to USBC in light of the EU system Co-shipper authorizationJoswiak cut straight to the point. “Obviously we’ll have to comply, we don’t have a choice,” he said, noting that the standard charging port will be a feature of future iPhone models.
As the case of USBC proves, when the European Commission gets its foot on technical compatibility issues, the sheer size of the common market means that not playing ball will result in significant losses for the affected big tech companies.
Having turned its attention to the iPhone’s NFC chip, there is now a precedent for the European Commission to enforce technical standards.
For the future of mobile payments in the European Union, mobile wallets on the continent may not be limited to QR code-initiated payments for a long time. In turn, the new possibilities of open banking could enhance the EU’s ambition to reduce the influence of foreign actors in the European payments landscape.
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