Abstract:
The British Competition and Markets Authority (CMA) has proposed a new plan to make it easier for British companies to develop iPhone wallets and contactless services that can replace Apple Pay. The CMA believes that Apple’s current access fees, contract terms and technical restrictions make it difficult for some financial technology companies to establish viable business models; this is still a proposal for public consultation and is not a new regulation that has taken effect.
Apple has opened the near field communication (NFC) function of the iPhone to British developers in 2024, but companies must sign with Apple, pay fees, and use the Secure Element in the device to save payment credentials. The CMA plans to require Apple to support two internationally commonly used access methods: the secure element solution and host card emulation (HCE). The former stores sensitive information in the security chip within the device, while the latter processes relevant information externally to the device, giving developers more technical options.
The CMA does not intend to directly stipulate access prices, but to formulate charging principles. The goal is to make the fees significantly lower than the levels currently charged by Apple, while still allowing Apple to charge for providing technology access. The UK regulator said the evidence reviewed did not show there were inherent safety issues with the secure element or HCE itself. Apple says developers are already able to use its technology to provide contactless services and opposes forcing the adoption of what it considers to be weak privacy and security protections.
CMA said that after the European Union required Apple to open up related technologies in 2024, Vipps launched its first alternative payment application within six months, and subsequently PayPal, Klarna, Curve and BBVA also launched related services; there is currently no wallet product in the UK that has been launched under Apple's current terms. If the solution is implemented, potential applications are not limited to payment, but also include digital identity and age verification, transportation tickets, car or hotel electronic keys, and membership points services.
CMA data shows that contactless payments account for 39% of all payment transactions in the UK, and more than 60% of adults use digital wallets, with Apple Wallet being the most popular choice here. This proposal is made in accordance with the UK's Digital Markets, Competition and Consumer Act 2024, and the public consultation will end on November 17, 2026; the CMA will make a final decision after evaluating the opinions.
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