Thursday, September 8, 2022
TradingPlatforms.com, a London-based education and comparison platform for online traders, reported that Apple Pay "has surpassed Mastercard as the payment system handling the most annual transactions at over $6 billion."
The report seems to ignore an important distinction, however. "Apple Pay is just a wallet, or wrapper, not an actual payment method," noted industry consultant Don Apgar.
Using publicly available data and estimates, TradingPlatforms reported that only Visa, with just under $10 trillion in yearly transactions, processes more payments than Apple Pay. Mastercard payments total $4.8 trillion yearly and Google Pay transactions account for $2.5 trillion in yearly purchases, according to TradingPlatforms.
But, of course, this is like comparing apples to fruit. All apples are fruit, but not all fruit are apples. Apple Pay and Google Pay transactions are branded mobile payments; Mastercard and Visa are branded payment networks.
When a consumer or business downloads Apple Pay the app must be loaded with credit or debit cards, which can be issued by any number of financial institutions. These include, but are not limited to the Apple Card, a Mastercard issued by Goldman Sachs that can only be used by loading it onto the Apple Pay app.
Google Pay works similarly – users load preferred payment cards onto the app.
The transaction totals attributed to Visa and Mastercard by TradingPlatforms include payments made with plastic cards as well as those made using mobile apps. The brands' networks process mobile payments (like Apple Pay, Google Pay, and their own branded tap-and-go apps) as well as traditional card payments.
Mobile payment adoption clearly is on the rise. CapGemini reported that nearly 45 percent of consumers surveyed in 2021 frequently use mobile wallets (averaging over 20 transactions a year), nearly double the 23 percent frequent users identified in a similar 2020 poll. The consultancy ties the jump in adoption to the COVID-19 pandemic.
"Apple Pay is increasingly becoming the go-to payment method for consumers and businesses alike," Edith Reads of TradingPlatforms stated in a press release. "Apple Pay has an undue advantage and benefits from their monopoly on iPhone NFC hardware. We expect to see Apple Pay continue to grow in popularity and market share in the coming years."
This "monopoly" is the subject of a proposed class action lawsuit, filed in U.S. District Court for the Northern District of California, in July 2022. Attorneys allege that Apple violates federal antitrust law by precluding competing mobile wallets from being loaded onto iPhones. They also take issue with the fact that Apple charges card issuers per-transaction fees—15 basis points on credit card payments and 5 cents for debit card payments—that cannot be passed along to cardholders. Android mobile wallets, like Google Pay, do not charge issuers per-transaction fees.
At last count, cards issued by 5,480 financial institutions (FIs) could be used on the Apple Pay app. Affinity Credit Union, a $137 million FI in Des Moines, Iowa, is the first of these issuers to join the lawsuit.
The law firm that filed the lawsuit, Hagens Berman in San Francisco, has a track record against Apple in court. In 2015, the firm secured a $560 million settlement against Apple and several publishing companies regarding price-fixing in the e-book market. In June 2022, the firm secured a $100 million out-of-court settlement from Apple in a lawsuit filed on behalf of small app developers who accused the tech giant of using its app store monopoly to impose "profit-killing" commissions.
Word of the lawsuit against Apple follows news that the European Commission has opened a formal antitrust investigation of Apple Pay. "It is important that Apple's measures do not deny consumers the benefits of new payment technologies, including better choice, quality, innovation and competitive prices," the European regulators stated. 
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