UK Regulator Proposes Lowering Apple Pay Access Fees for Rivals
The UK's Competition and Markets Authority has proposed rules to reduce Apple's fees and mandate host card emulation for third-party payment apps on iPhones. The CMA argues current restrictions hinder competition, noting no rival wallets have launched in the UK since 2024, unlike in the EU. Apple supports the move but prefers its proprietary Secure Element for better privacy and security, though it may face lower revenue if the new framework is adopted.
Key points
- The UK's Competition and Markets Authority (CMA) proposed new regulations to lower Apple's access fees and require support for host card emulation (HCE) for third-party payment developers.
- The CMA argues that Apple's current fees and mandatory use of the Secure Element chip prevent fintechs from launching competitive contactless payment apps in the UK market.
- Since Apple opened NFC access to developers in the UK in 2024, no rival wallet products have launched, contrasting with the European Union where several alternatives exist under free HCE rules.
- Apple responded that developers can already offer contactless services via its technology, arguing that HCE might lower privacy and security protections compared to the Secure Element.
- The proposed rules aim to make it commercially viable for more businesses to innovate, potentially increasing consumer choice for tap-to-pay services on iPhones in the UK.
The UK's Competition and Markets Authority (CMA) has proposed a new regulatory framework designed to intensify competition in the mobile payments sector by altering how third-party developers access iPhone technology. The regulator argues that Apple's current fee structure and technical restrictions are stifling innovation from fintech companies and other businesses. Specifically, the CMA wants to mandate support for host card emulation (HCE), a method that allows payment apps to function without relying on Apple's proprietary Secure Element chip, which stores sensitive payment credentials.
Under the current regime, established in 2024, developers must sign agreements with Apple and pay access fees to utilize the iPhone's NFC technology. The CMA notes that while this access has been granted, no competing wallet-type product has successfully launched in the UK, a stark contrast to the European Union. In the EU, Apple offers HCE for free under commitments agreed upon in 2024, resulting in the emergence of several alternative payment options. The CMA believes that substantially lowering access fees and allowing HCE would replicate this competitive environment in the UK.
Apple has acknowledged the proposal, stating that developers can already offer contactless services using its existing technology. However, the company expressed a preference for its current approach, suggesting that HCE might offer lower privacy and security protections than the Secure Element. While Apple will still be permitted to charge fees under the new rules, the CMA expects the changes to make it commercially viable for more businesses to enter the market, ultimately giving consumers more choices for contactless payments on their devices.
Sources
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