Dive Brief:
- Apple faces a class action over the fees it charged for payments made via its devices after credit unions who sued the technology company won a federal court judge's approval last week to let the antitrust lawsuit proceed on behalf of similarly injured financial institutions. The card issuers contended in their 2022 lawsuit that Apple charged anticompetitive fees for each Apple Pay transaction due to its monopoly for payments made with Apple devices.
- U.S. District Judge Jeffrey White in the Northern District of California certified the class on Wednesday, while also denying Apple’s motion to exclude testimony from an economist the plaintiffs hired to review competition in the digital wallet market.
- Apple spokespeople did not respond to an email Monday seeking comment on the ruling. The plaintiffs are “pleased” with the ruling and noted that the class “includes all U.S. entities that issued any payment card enabled for Apple Pay” and paid Apple a fee, according to a Friday press release from their law firm Hagens Berman Sobol Shapiro.
Dive Insight:
Apple Pay charges card issuers 0.15% of the transaction on credit card payments and a flat ½ cent for any size of payment with debit cards, according to the lawsuit, which alleged those fees are “manifestly supracompetitive.”
Payments made with Google Pay and Samsung Pay, via Android devices, are free for card issuers, according to the lawsuit. Google spokespeople did not respond to a request Monday for comment on the issue.
“The fact that Apple can price discriminate despite providing precisely the same service to debit and credit card transactions shows that it can, and indeed has imposed a small but significant, non-transitory increase in price when the opportunity to do so arises,” the credit unions wrote in their lawsuit.
The complaint was filed in July 2022 by Affinity Credit Union of Des Moines, Iowa; GreenState Credit Union of North Liberty, Iowa; and Consumers Co-Op Credit Union of Gurnee, Illinois.
In its response to the lawsuit, filed in October 2023, Apple said that consumers select multiple other payment methods besides Apple Pay.
“The fact that Apple Pay is designed and engineered to be the only tap-and-pay method on Apple’s own devices does nothing to insulate Apple Pay from competition with the numerous other digital and physical payment methods that are available in the marketplace,” the Cupertino, California-based company wrote.
The class could consist of thousands of members, White wrote in his ruling, citing estimates from the plaintiffs. The court appointed Hagens Berman and law firm Sperling Kenny Nachwalter to represent the card issuers class.
Apple Pay’s function is “essentially identical” to payments on Android devices using mobile wallets, such as Google Pay and Samsung Pay, Steve Berman, a Seattle attorney for the plaintiffs, said in a press release at the time of the lawsuit filing.
However, “there is competition on Android devices, with multiple wallets offering contactless payments, whereas Apple has barred all rivals, making Apple Pay the only option,” accounting for the difference in payment cost, Berman said.
Apple introduced the digital payment method in September 2014 to house consumers’ payment cards. The technology uses a near-field communications antenna to allow for device tap payments at physical merchants.
