The Competition and Markets Authority has called on Apple to significantly reduce its fees and widen access to its contactless payment technology, arguing that current restrictions are preventing financial technology firms from innovating and competing effectively in the UK market.
According to the watchdog, nearly two in five payments in Britain are now contactless, with close to 60 per cent of people using digital wallets. Apple’s wallet remains the most popular in the country.
The CMA is consulting on proposals it believes would force Apple’s fees to fall substantially. The regulator argues that the iPhone maker’s current charges and technical restrictions are blocking the development of new payment, ticketing and travel applications.
Access to alternative payment standard
The proposed measures would compel Apple to grant access to applications that make payments using Host Card Emulation (HCE), a widely used alternative contactless technology standard that the company does not currently permit in the UK.
Sarah Cardell, chief executive of the CMA, said the authority had been informed that high fees, strict terms and technical restrictions relating to Apple’s contactless technology made it too difficult for challengers to innovate and compete.
“By removing barriers to entry, we can help create the conditions for brilliant British businesses with great ideas to develop new products and services,” she said.
The watchdog pointed to the UK’s position as one of the world’s leading fintech hubs, generating more than £214 billion in turnover and supporting over 360,000 jobs. Changes could enable development of a wide range of new products, including account-to-account payments, digital identification, travel passes and digital keys, according to the CMA.
Apple defends current system
Apple has maintained that widening access could undermine security and insisted that its current arrangements do not prevent innovation. In a statement to the BBC, the company said the existing system had permitted developers in the UK and worldwide to securely offer contactless transactions directly within their applications.
The tech giant argued that this solution enables developers and banks to create innovative products and services whilst ensuring users’ sensitive data remains protected by the highest security standards.
“We do not believe the CMA should require Apple to adopt an approach with lower privacy and security protections. We will continue to engage constructively to reach an outcome that is in the best interest of our users,” the company said.
Last year Apple warned UK regulators against following the same path as the European Union, which forced the firm to open up a range of its technologies to rivals. However, the CMA argued that, unlike the EU, it is focused on ensuring the interoperability of particular aspects of Apple’s technology, such as digital wallets and watches.
The regulator noted that moves to open up the technology in the EU had resulted in the creation of new businesses. In the six months since the EU forced Apple to widen access, an alternative payment app Vipps launched, followed by PayPal, Klarna, Curve and BBVA. In contrast, not a single firm has launched a wallet-type product to compete with Apple’s in the UK, the watchdog said.
Apple has countered that these new applications could easily have been launched prior to the EU changes.
What this means for Poles in the UK
If the CMA’s proposals go ahead, Polish residents in Britain could gain access to a wider choice of digital payment and wallet applications on their iPhones. This may be particularly relevant for those who maintain financial ties with Poland, as new fintech firms could develop services that make it easier to manage accounts in multiple currencies or send money internationally at lower cost.
The changes could also lead to new digital travel pass and ticketing applications, potentially offering more convenient options for public transport or international travel between the UK and Poland. Lower fees charged by Apple could translate into reduced costs for consumers using these services, though the CMA has said it will not set specific price limits. Anyone currently using Apple Pay would continue to be able to do so, but would have more alternatives to choose from as the market opens up to competition.
