Thursday, December 21, 2023
A complaint filed in U. S. District Court for the Southern District of Illinois on Dec. 14, 2023, names American Express, Discover, Chase, Citibank, Bank of America, Wells Fargo and Capital One as "conspirators" of the "entrenched networks," but does not name them as targets of the lawsuit.
The proposed class includes merchants that accepted Apple Pay at physical points of sale, from December 2019 to the present. Attorneys from seven law firms signed on to press the case.
"Since entering into these unlawful agreements, starting in 2014, Apple and the Entrenched Networks have continued to take affirmative steps in furtherance of the conspiracy, including, on information and belief, reaffirming this agreement (via written contract) as recently as 2020," the lawsuit alleges. It seeks treble damages for inflated fees paid to Apple as a result of its agreements with Visa and Mastercard, and other relief.
The lawsuit claims Apple "had the incentive and the ability to inject needed competition into the U.S. market for POS payment card network services by providing merchants a payment solution that bypassed the Entrenched Networks with more competitive transaction fees." It is alleged the result would have been billions of dollars in savings on merchant transaction fees.
In 2019, Apple revealed there were more than 1.4 billion active Apple devices in circulation worldwide, and each came with the Apple Pay tap-and-go (NFC) technology preinstalled. By 2023, the total was 1.46 billion, according publicly available data. By comparison, there were about 500 million Visa and Mastercard credit cards in Americans' wallets in 2022, according to the U.S. Census Bureau and the Nilson Report.
The Apple Pay user base, along with the recognizable brand name and mobile wallet technology, positioned Apple to enter the POS payment services market in competition with Visa and Mastercard, the lawsuit states.
To fend off this possibility, Mirage alleges, Apple, Mastercard and Visa "concocted an anti-competitive scheme" that included Apple's promise not to create its own payment system. Apple also allegedly agreed to restrict payment methods supported by Apple Pay to credit and debit cards, and to keep other payment apps off its phones. In exchange, Visa and Mastercard "offered Apple a very large and ongoing cash bribe," the lawsuit alleges: 0.15 percent (15 basis points) on the value of all U.S. credit card transactions sent through the Visa and Mastercard networks, and 0.5 cents for each debit transaction. Visa and Mastercard also allegedly gave Apple say in which issuers would be allowed on Apple Pay, contrary to the card brands' honor-all-cards rules.
"Apple and the Entrenched Networks made this agreement to stymie competing mobile wallets or other applications from offering consumers and merchants a more cost-effective POS payment system, such as ACH or other direct bank-to-bank solutions," the lawsuit alleges. The Green Sheet reached out to both Mastercard and Visa for comments, but neither has yet responded.
Apple has been facing pressure for several years to open up its mobile payment system to competitors. Germany passed a law in 2019 requiring the company to open its Apple Pay app to competitors, and to allow any issuer's cards to be loaded into Apple Pay.
The European Commission launched an investigation into suspected anti-competitive activities, like Apple restricting rivals access to Apple Pay. A similar investigation was taken up by the Australian government in 2021. Earlier this month, Apple relented, stating it would be willing to let rivals in the European Union access Apple Pay.
In the United States,Apple recently agreed to let consumers load PayPal and Venmo credit and debit cards onto Apple Pay. Previously that had not been allowed. 
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