Apple could face a much larger fight over the fees it collects every time you use Apple Pay after a federal judge allowed U.S. banks and credit unions to pursue their antitrust claims as a class.
U.S. District Judge Jeffrey White certified the class this week, covering U.S. financial institutions that issued Apple Pay-enabled cards and paid Apple transaction fees.
The lawsuit has been in court since 2022 and targets a lucrative part of Apple Pay’s business model: Apple charges card issuers 0.15% of credit card transactions and half a cent for debit transactions.
That means a $500 credit card purchase through Apple Pay sends $0.75 to Apple from the issuing bank. The plaintiffs allege those fees have generated as much as $1 billion annually for Apple.
The banks say Apple gave them no alternative
For years, Apple restricted access to the iPhone’s NFC hardware used for contactless payments, effectively making Apple Pay the only mobile wallet that could offer the familiar tap-to-pay experience on an iPhone.
The banks and credit unions argue that this gave Apple enough control to impose fees they wouldn’t have accepted in a more competitive market.
They point to Android, where multiple mobile wallets can handle contactless payments, and Google doesn’t impose the same transaction fee on card issuers.
The argument isn’t that Apple charges you directly when you tap your iPhone at a checkout terminal. The bank or credit union behind your card pays the fee.
The lawsuit seeks to recover fees financial institutions say they shouldn’t have paid in the first place.
Judge White also rejected Apple’s attempt to exclude expert testimony that the plaintiffs say supports their claim that Apple held monopoly power in the relevant mobile wallet market.
The iPhone isn’t as locked down anymore
One important part of the case has changed since the lawsuit was filed. Starting with iOS 18.1, Apple opened its NFC and Secure Element technology to eligible third-party developers in the U.S. and several other countries.
Those apps can conduct contactless transactions, and you can choose an eligible alternative as your default contactless app.
That means Apple Pay is no longer the only way for an app to provide that kind of tap-to-pay experience on an iPhone.
But opening the hardware later doesn’t erase the fees banks already paid under the previous system. That’s where a potentially expensive part of the lawsuit remains.
The banks and credit unions are seeking repayment of those fees along with changes to the policies they allege allowed Apple to collect them.
Class certification doesn’t decide whether Apple violated antitrust law or whether the banks are entitled to that money.
It does allow thousands of financial institutions potentially covered by the case to pursue those claims together rather than fighting Apple individually.
