## Apple’s NFC Platform to Welcome Third-Party Mobile Wallets
Apple Inc., the multinational technology giant, is on the brink of a significant breakthrough in the European market. The European Commission is expected to approve Apple’s move to open up its Near Field Communication (NFC) platform to third-party mobile wallets as early as May 2024. This landmark decision could save the company from a staggering $40 billion fine.
NFC and Apple Pay
Primarily, Apple uses its NFC chip for Apple Pay, a mobile payment and digital wallet service. However, the company faced backlash for limiting its NFC chip’s access solely to Apple Pay since 2015. This restriction prevented third-party payment processors from utilizing the same hardware, forcing them to align with Apple’s payment system. Critics argued that this limitation stifled competition within the NFC payments sphere, particularly concerning Apple devices.
The EU’s Antitrust Investigation
The European Commission began investigating Apple Pay’s potentially anticompetitive behavior as early as 2019. If found guilty of antitrust violations, Apple could face a colossal fine amounting to as much as 10% of its global annual turnover–a sum potentially reaching $40 billion.
Compliance with the EU Digital Markets Act
In response to pressure from the EU and feedback from Apple Pay’s competitors and customers, Apple announced in January 2024 that it would make changes to its iOS to comply with the incoming EU Digital Markets Act. As part of this compliance, Apple committed to introducing new Application Programming Interfaces (APIs) to utilize its NFC hardware, specifically targeting banking and wallet apps operating in the European Economic Area.
This development would provide banks with an alternative to using Apple Pay or the Apple Wallet, thereby circumventing potential transaction charges that Apple would typically apply through its services.
Awaiting EU Approval
Although the EU may require additional adjustments to Apple’s plans, sources suggest that approval could arrive as soon as May 2024. However, potential delays could push the approval back to summer 2024.
Conclusion
Apple’s decision to open its NFC platform to third-party mobile wallets marks a significant shift in the company’s approach. In doing so, Apple not only potentially avoids a hefty fine but also fosters a more competitive environment within the NFC payments sphere.
Questions and Answers
1. What is NFC and how does Apple use it?
NFC, or Near Field Communication, is a technology that enables short-range communication between compatible devices. Apple primarily uses its NFC chip for its mobile payment and digital wallet service, Apple Pay.
2. Why was the European Commission investigating Apple Pay?
The European Commission started investigating Apple Pay in 2019 due to concerns that Apple may have been acting in an anticompetitive manner by restricting access to its NFC chip solely to Apple Pay.
3. What are the potential consequences for Apple if found guilty of antitrust violations?
If found guilty of antitrust violations by the European Commission, Apple could face a fine amounting to as much as 10% of its global annual turnover–a sum potentially reaching $40 billion.
4. How is Apple responding to the EU’s investigation?
In response to the investigation, Apple announced that it would make changes to its iOS to comply with the EU Digital Markets Act. These changes include introducing new APIs to utilize its NFC hardware for banking and wallet apps operating in the European Economic Area.
5. What does opening up the NFC platform mean for third-party mobile wallets?
By opening up its NFC platform to third-party mobile wallets, Apple would allow these services to utilize its NFC hardware. This move could increase competition within the NFC payments sphere and provide banks with an alternative to using Apple Pay or the Apple Wallet.
