Apple loosens controls on iPhone payments to end EU antitrust investigation

Good news for iPhone users: you’ll no longer have to use Apple Pay for tap-to-pay payments! Apple has decided to support third-party mobile wallet developers by finally giving them free access to the phone’s near-field communication (NFC) technology.

And now the bad news: the above does not NO apply if you live outside the European Economic Area, which means the EU plus Norway, Iceland and Liechtenstein.

Apple is changing its methods just to end a long-running antitrust case. The European Commission began investigating Apple’s restrictions on the iPhone’s NFC chip more than four years ago and filed charges in 2022. Apple proposed the changes earlier this year. The commission asked app developers and various financial services companies for their feedback, then asked Apple to make some changes. Apple came back with a revised set of commitments, which the commission announced today.

Under the commitments, Apple will be required to make NFC mobile wallet developers free to use, using a fair and objective process to determine their eligibility. These third-party wallets will operate in a host card emulation (HCE) mode to provide secure storage of payment credentials, as is already done in Android. The commission says this is as secure as Apple Pay’s method of relying on a hardware “security element” to protect data, and offers the same user experience.

Users will be able to choose any wallet as their default, so it will automatically appear when they double-click on the side or place their phone next to the reader. People with Apple IDs registered in the EEA will also be able to use third-party wallets when traveling outside the region, but only if they’re on a temporary trip. Developers will also be able to combine the newfound payment functionality with other NFC-based features, such as using your phone as a concert ticket or car key.

The European Central Bank has approved these changes, although it also suggested that Apple could face additional obligations once the digital euro becomes a reality (currently in a preparatory phase).

“From now on, Apple can no longer use its control over the iPhone ecosystem to keep other mobile wallets out of the market,” Margrethe Vestager, head of the European Commission’s Antitrust Commission, said at a press conference today. “Competitive wallet makers, as well as consumers, will benefit from these changes, opening up innovation and choice while ensuring payment security.”

When you factor in Apple’s reluctance to accept third-party iOS app stores — one of the company’s many commitments under the EU’s new Digital Markets Act — it’s clear that the company’s control over the system is rapidly eroding.

For now, it may only apply to Europe, and there may still be some implementation issues, but Apple’s biggest problem is that the rest of the world is watching. If third-party app stores and wallets can work in Europe without the sky falling, they can work anywhere else. And if the US Federal Trade Commission or another national regulator proposes a similar change, Apple won’t have much to argue against.

In other Apple news, Bloomberg reports that the company’s $3,499 Vision Pro virtual reality headset still failed to sell 100,000 units during the quarter. Sales, especially in the U.S., are likely to decline sharply until a cheaper version is released.

More news below.

David Meyer

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