The lawsuit alleges Visa and Mastercard bribed Apple to hamper competition, which drove up merchant fees.

A proposed class action lawsuit has accused Apple of accepting a form of bribe from Visa and Mastercard to ensure their dominance over point-of-sale payment card services for Apple Pay transactions, according to Reuters. As a result, the lawsuit says merchants have been forced to pay higher fees.

The companies are being sued by beverage retailer Mirage Wine & Spirits in Illinois on behalf of “all merchants in the United States that accepted Apple Pay as a method of payment at the physical point-of-sale.” According to the complaint, Apple made an agreement with Visa and Mastercard that did away with any incentive for it to develop its own competing point-of-sale transaction payment network or allow other companies to make use of iPhone’s “tap to pay” NFC functionality with third-party wallet apps. On the iPhone, Apple’s own wallet app is the only option. All of this has led to inflated merchant fees, the suit argues.

“In exchange for agreeing not to compete with Visa and Mastercard in the Relevant Market, the two card networks offered Apple a very large and ongoing cash bribe,” the lawsuit states. This bribe came as a percentage of the two companies’ transaction fees for credit and debit card payments made with Apple Pay. “Even as Apple Pay was in its infancy, the Entrenched Networks and Apple understood that this bribe would amount to hundreds of millions of dollars per year.”

Apple has been accused of anti-competitive behavior with Apple Pay in the past for how it blocks third-party access to its contactless payment technology. But earlier this week, Reuters reported that Apple may open up NFC access in the EU to avoid a fine in a case that has been ongoing since 2020.

Source:
courtesy of ENGADGET

by Cheyenne MacDonald

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