Apple Pay NFC Restriction: What Does This Mean for Payment Gateways on the App Store?

Credit: Firmbee

The European Commission recently sent a Statement of Objections to Apple regarding its restrictive approach to Near-Field Communication (NFC). The allegation bared that Apple limits the use of NFC chips to its mobile wallet, Apple Pay, while denying third-party apps access to the technology on iOS. If proven, this unfairly places other platforms at a disadvantage since NFC powers the “tap and go” features of contactless payment solutions, thereby lifting Apple Pay above similar apps.

NFC enables electronic devices to exchange information with a single touch. Besides financial data, the technology allows gadgets to transfer documents, business cards, and coupons, among others. With this, the Apple Pay NFC restriction potentially affects even applications outside the payment sphere.

The European Union (EU) alleges that Apple violated Article 102 of the Treaty on the Functioning of the European Union, which forbids the abuse of a dominant market position. In response, Apple released a statement contesting the allegation.

A company spokesperson mentioned that “Apple Pay is only one of many options available to European consumers for making payments, and has ensured equal access to NFC while setting industry-leading standards for privacy and security.” The company also states that other payment apps are still well-received by iPhone users despite not having a “tap-and-go” feature.

A report reveals that Paypal, one of the leading payment gateways, was one of the companies that expressed its concern to the EU. Paypal offers a tap-to-pay feature for Android but found itself hindered by the Apple Pay NFC restriction.

An Unfair Advantage?

If the allegations are proven to be true, payment gateways face an uphill battle with iOS users. A 2020 study by Mastercard shows that 79% of consumers worldwide and 91% in the Asia Pacific were leveraging tap-to-pay options. The share of tap-to-pay users could be even bigger right now considering that COVID-19 made people more accustomed to contactless payments. And this gives Apple Pay an outright advantage.

Payment gateways do have ways to circumvent the alleged restriction. They can leverage Google Wallet to create cards but the transactional data remains with Apple. Payment solutions can also build on their other features to attract more users.

For instance, some platforms streamline cash flows and enable users to customize payment forms. Moreover, there are solutions that focus on increasing and enhancing pay integrations to make digital payments painless. Building on these extra features potentially makes the platforms more relevant to the modern consumer.

Besides, the mounting pressure on Apple by the EU could lead the company to lift its alleged NFC restriction. After all, it is facing several complaints from the EU, including a case in which Apple Music is being unfairly favored over other music streaming platforms.

However, before Apple formally removes the reported restriction, it is best for payment gateways to adhere to the policy of Apple’s marketplace and find ways to underscore other value propositions. At the end of the day, Apple wields full control over the terms, conditions, and fees of its store. And it maintains a large global following who will defend the brand at all costs. For now, gaining a larger share of customers from that following appears to be a more pressing concern.