Apple will give third-party wallet providers access to NFC in iPhones for 10 years

Following the antitrust investigation into Apple regarding Apple Pay, the European Commission sent Apple a Statement of Objections in May 2022. The Commission found that Apple was abusing its dominant position in the mobile wallet market on iOS. Apple restricted the NFC capability in iPhones to the Apple Pay mobile wallet, thereby preventing other payment providers from offering contactless payments similar to Apple Pay. Responding to the concerns raised by the Commission, Apple made the following commitments in January 2024.

To address the Commission's competition concerns, Apple initially offered the following commitments:

• To allow third-party wallet providers access to the NFC input on iOS devices free of charge, without having to use Apple Pay or Apple Wallet. Apple will enable access to NFC in Host Card Emulation mode (‘HCE'). HCE allows to securely store payment credentials and complete transactions using NFC, without relying on an in-device secure element.
• To apply a fair, objective, transparent and non-discriminatory procedure and eligibility criteria to grant NFC access to third-party mobile wallet app developers.
• To enable users to easily set an HCE payment app as their default app for payments in stores and to use relevant functionalities such as Field Detect (which opens the user's default payment app when a locked iPhone is presented to an NFC reader), Double-click (which launches the default payment app when double clicking the phone's side or home button), and authentication tools such as Touch ID, Face ID, and device passcode.
• To establish a monitoring mechanism and separate dispute settlement system to allow for independent review of Apple's decisions restricting access.
• To apply the abovementioned commitments to all third-party mobile app developers established in the European Economic Area (‘EEA') and to all iOS users with an Apple ID registered in the EEA, also while traveling temporarily outside the EEA.

The Commission had a discussion with all interested third parties to verify whether Apple's commitments remove all of the competition concerns. Based on the feedback, Apple has now changed its initial proposal and committed the following:

• To extend the possibility to initiate payments with HCE payment apps at other industry-certified terminals, such as merchant phones or devices used as terminal (so called SoftPOS), if this is enabled.
• To explicitly acknowledge that HCE developers are not prevented from combining the HCE payment function with other NFC functionalities or use cases.
• To remove the requirement for developers to have a licence as a Payment Service Provider (‘PSP') or a binding agreement with a PSP to access the NFC input.
• To allow NFC access for developers to pre-build payment apps for third party mobile wallet providers.
• To update the HCE architecture to comply with evolving industry standards used by Apple Pay, and to continue to update standards even if they are no longer implemented by Apple Pay, under certain conditions.
• To enable developers to prompt users to easily set up their default payment app and redirect users to the default NFC settings page, enabling defaulting with only a few clicks.
• To comply with the same industry standard-specifications as developers of HCE payment apps and to protect confidential information obtained in the context of an audit.
• To shorten deadlines for resolving disputes. Moreover, Apple offered additional independence and procedural guarantees for the monitoring trustee.

Following the above final commitments, the Commission has decided to make them legally binding on Apple. So, Apple will have to follow the above commitments for 10 years throughout the EEA. The implementation of these commitments will be monitored by a monitoring trustee.

Margrethe Vestager, Executive Vice-President in charge of competition policy, said the following regarding Apple's commitment.

It is safe and convenient to pay with your phone. Apple has committed to allow rivals to access the 'tap and go’ technology of iPhones. Today’s decision makes Apple’ commitments binding. It opens up competition in this crucial sector, by preventing Apple from excluding other mobile wallets from the iPhone’s ecosystem. From now on, competitors will be able to effectively compete with Apple Pay for mobile payments with the iPhone in shops. So consumers will have a wider range of safe and innovative mobile wallets to choose from.

Source: EC