UK Regulator Presses Apple to Open Payment Technology Access

The United Kingdom's competition watchdog is calling on Apple to broaden access to its contactless payment technology, arguing that current restrictions and fees hinder innovation and competition for financial technology firms. The Competition and Markets Authority (CMA) believes that allowing wider access could lead to the development of new payment, ticketing, and travel applications for UK smartphone users.

The CMA is proposing measures that would require Apple to grant access to its systems for apps utilizing the Host Card Emulation (HCE) standard, a contactless technology that Apple currently does not permit in the UK. The regulator also seeks to significantly reduce the fees Apple charges companies for using its contactless technology.

According to the CMA, nearly 40% of payments in the UK are now contactless, with digital wallets, particularly Apple's, being the most popular choice for nearly 60% of users. The watchdog asserts that Apple's current fees and rules are restricting the growth and innovation within the UK's fintech sector, which is a significant global hub generating substantial turnover and supporting numerous jobs.

Apple, however, maintains that widening access could compromise security and that its existing arrangements enable developers to securely offer contactless transactions within their apps for various purposes, including in-store payments, transit passes, and event tickets. The company stated that its current solution allows developers and banks to create innovative products while ensuring user data is protected by high security standards. Apple also warned UK regulators against mandating changes similar to those implemented in the European Union, which forced the company to open up a range of its technologies to rivals.

The CMA distinguishes its proposals from those in the EU, focusing specifically on ensuring interoperability for certain aspects of Apple's technology, such as digital wallets and watches. The regulator pointed to the EU market, where changes have reportedly led to the launch of new businesses and payment apps, including Vipps, PayPal, Klarna, Curve, and BBVA, in the six months following the EU's mandate.

Apple argues that these apps could have been launched independently of the EU's requirements. In contrast, the CMA noted that no competing wallet-type product has been launched in the UK to challenge Apple's offering. The CMA clarified that it is not dictating specific prices or terms but expects its plans to result in lower fees for third-party developers.

Sarah Cardell, Chief Executive of the CMA, stated that the authority has received feedback indicating that high fees, strict terms, and technical limitations related to Apple's contactless technology make it difficult for competitors to innovate and compete effectively. "By removing barriers to entry, we can help create the conditions for brilliant British businesses with great ideas to develop new products and services," Cardell said.