Apple Faces Class Action Lawsuit Over Apple Pay Fees and Monopoly Claims

Court Certifies Financial Institutions as a Class

The lawsuit stems from a legal action initiated in July 2022 by Consumers Co-Op Credit Union of Gurnee, Illinois; GreenState Credit Union of North Liberty, Iowa; and Affinity Credit Union of Des Moines, Iowa. The court appointed the law firms Hagens Berman Sobol Shapiro and Sperling Kenny Nachwalter to represent the financial institutions.

In addition to granting class certification, Judge White denied a motion filed by Apple to exclude expert testimony from an economist hired by the plaintiffs. As 9to5mac.com reported, counsel for the plaintiffs emphasized that this expert testimony provides shared evidence demonstrating that Apple holds monopoly power within a distinct antitrust aftermarket for iOS tap-and-pay mobile wallets, as well as the wider market encompassing all mobile wallets.

Disputed Fee Structure and Hardware Access

The core of the legal challenge centers on the fees Apple charges card issuers for transactions processed through Apple Pay. The lawsuit contends that these fees are manifestly supracompetitive, whereas payments made with Google Pay and Samsung Pay via Android devices are free for card issuers.

Plaintiffs argue that the price discrepancy exists because Android supports competition with multiple mobile wallets offering contactless payments, whereas Apple blocks rival wallets from accessing the iPhone’s near-field communication (NFC) hardware. Steve Berman, an attorney for the plaintiffs at Hagens Berman, stated that Apple Pay’s function is essentially identical to payments on Android devices, but Apple has barred all rivals to make Apple Pay the only option, according to the initial lawsuit reporting.

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.

Credit Unions Lawsuit Complaint

Apple Defense and Market Context

In its response filed in October 2023, Apple defended its payment system by asserting that consumers select multiple other payment methods besides Apple Pay. The Cupertino, California-based technology company argued that the design restricting Apple Pay as the sole tap-and-pay method on its own devices does not insulate it from broader marketplace competition.

“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,” Apple wrote in its court response. Apple spokespeople did not respond to an email seeking comment on the class-certification ruling.

Potential Implications for Retailers and Mobile Payments

For retailers and merchants, the class-action lawsuit highlights ongoing debates over the cost structure of mobile payments. If Apple is required to open its hardware to third-party wallets, merchants may eventually gain more options for accepting contactless payments beyond Apple Pay and Google Pay, potentially integrating flexible financing options directly into a wider variety of digital wallets.

The lawsuit seeks financial reimbursement for card issuers that paid Apple Pay fees, alongside an injunction against Apple’s challenged policies. With the class now certified, thousands of potential member institutions can pursue claims together as the litigation advances in federal court.