The European Union said Apple has agreed to ensure commitments over the operation of Apple Pay in the final settlement of its long-running investigation into potential competition abuses. Announcing this Thursday, Commission EVP Margrethe Vestager heads up the EU's competition division.

The company needs to implement these changes by July 25 to let competing mobile wallets' developers establish contactless payments using the dominant technology in the EU, NFC, and therefore be able to offer their users the functions called "tap and go". They will gain access to such critical iOS features as, for example, double-click app launch and Face ID, Touch ID, and passcodes for authentications.

Apple will also permit users to set a wallet app of their choice as the default instead of the Apple Wallet.

The bloc's competition division opened an formal investigation of Apple Pay, Apple's mobile payment and mobile wallet technology, back in June 2020 after receiving a number of complaints. Initially, the probe was scoped to look at the overall uses of Apple Pay. Later the case narrowed to focus on the use of Apple's technology for contactless payments.

It is two years since the European Union's Commission started investigating the matter, but only just reported preliminary findings that it has discovered Apple abused a dominant position to block competitors from offering NFC-enabled contactless payments on iPhone — meaning they cannot build rival mobile wallets and thus cannot compete fairly with Apple Pay.

The EU took particular exception to the fact that Apple restrictions were limiting the ability of rivals to build wallet apps that can wirelessly talk to NFC payments terminals, as Apple Pay does. Suspecting this was enabled, restricting the contactless payment technology created by Apple from gaining market share unfairly. And it says that Apple needs to make full access to NFC possible, so competitors have a chance to develop alternative wallets.

Apple was allowed to respond to the May 2022 EU Statement of Objections. The major development since then arose in January 2024 when it submitted a package of revisions it would accept in order to bring the case to an end. Its proposal included permitting third party developers of mobile wallet and payment services to have fuller access, free of charge, to the NFC functionality on iOS through a set of APIs, rather than having to use its own payment or wallet tech.

The deal would still bar competitors from tapping into a secure chip on Apple devices referred to as the secure element, which it uses to make the payments facilitated through Apple Pay even more secure. However Apple said that it would provide "equivalent access" to NFC components through a mechanism called "Host Card Emulation ('HCE') mode". It said it would let third-party wallets store payment credentials and complete transactions using NFC securely, without tapping into the secure element.

Other promises made by Apple during that time were to make third parties receive extra features and functionality, such as default of a user's preferred payment apps and providing access to authentication features like Face ID, its biometric authentication technology. It also promised to use FRAND terms in determining whether or not to grant access to the NFC technology.

Stronger commitments
Vestager said Thursday the Commission has accepted Apple's offer after pressing for some improvements.
"That by exclusion of competitors from the market it might have restricted innovation. It reduces choice and diminishes innovation. That harms consumers and is forbidden in the terms of EU competition rules. To this end, Apple offered a package of commitments some months ago," she added.

Over the last month, we tested a package, we got feedback on whether the remedies could work, if they could address our concerns. This issue raised a lot of interest. Many banks, app developers, card issuers, financial associations gave us their feedback. We looked very carefully at those comments, and we asked Apple to improve their commitments. Then Apple offered improved remedies, and here we are today, making those remedies binding on Apple.

Details of exactly how Apple enhanced its January offer following industry feedback are set out in the Commission's press release – but they include agreeing to:

Dropping the insistence that developers must have a license as a Payment Service Provider (PSP) or a binding agreement with a PSP to access the NFC input;
Developing the HCE architecture into something that is compatible with evolving industry standards used by Apple Pay;
And shortening deadlines for settling any disputes, among others.
Since the EU opened the Apple Pay antitrust case the bloc has passed an update to its competition rulebook which is intended to boost the contestibility of digital markets by applying upfront obligations on a number of major platforms, including Apple's iOS, so that tech giants cannot block competitors from accessing key infrastructure they operate. EU lawmakers are looking to the Digital Markets Act to advance the process of rebooting digital dominance and restoring competition to tipped markets.

Just a little more than a week since it reported it was meeting with industry stakeholders about the terms Apple was offering for its Apple Pay service, Apple has expressed that the changes it proposed were within the bounds of the Digital Markets Act.

Vestager said that the commitments on Apple Pay by Apple accepted by the EU go beyond what's required by DMA. "For instance, they include monitoring mechanisms as well as solutions for dispute resolution," noted Vestager, adding: "That already shows that the DMA therefore goes hand in hand with antitrust enforcement.".

From now on, Apple can no longer use its control or the iPhone ecosystem to keep mobile wallets out of the market. Competing wallet developers as well as consumers will benefit from these changes, opening up innovation and choice while, of course, keeping payments secure.

The commitments are binding for 10 years on Apple. Failure to abide by them will attract stiff penalties.

"Today's decision makes the commitments offered by Apple legally binding. If Apple does not honour such commitments, the Commission may impose a fine of up to 10% of its total annual turnover, without having to find an infringement of EU antitrust rules, or a periodic penalty payment of 5% per day of its daily turnover for every day of non-compliance," an EU spokesperson told us.

An Apple spokesperson was contacted for comment on the above, with this statement: "Apple is making available to developers in the European Economic Area the option to enable NFC contactless payments and contactless transactions for car keys, closed loop transit, corporate badges, home keys, hotel keys, merchant loyalty/rewards, and event tickets from within their iOS apps using Host Card Emulation based APIs.". Apple Pay and Apple Wallet are going to continue available for the users and developers in the EEA, offering customers easy, secure, and private payments, together with seamless presentations of passes from Apple Wallet.