For Apple, the iPhone and the App Store have historically been linchpins for its ecosystem — where the hardware is an onramp to a broad range of services that forge a continuum of commerce, content and payments.
But Apple’s opening its payments tech and its App store to rivals in Europe, which seemingly loosens some of the bindings that tether users to those services, including Apple Pay and Apple Wallet.
Given the continued scrutiny by regulators, and the legal wrangling in the Epic Games case, the United States may be the next market where access is broadened.
The commitments in Europe, and the jousting with the Justice Department (more on this below) in the U.S. on antitrust allegations come at a time when Apple is relying on its services segment to offset the volatile nature of hardware sales, where the trend has been downward.
The impact to the services components — particularly payments and the apps — may be murky at the moment. But equally murky will be whether or not just-announced efforts to expand Apple Pay “off” the iPhone will overcome this week’s events.
The EU events of Thursday (July 11) focus on what is known as “tap-and-pay” technology; elsewhere, we’ve seen Apple allow the Epic Games store app in the region for its operating system.
As PYMNTS reported Thursday, as Apple sidestepped a fine from regulators in the European Union, it agreed to let other companies access its tap-and-go technologies. As a result, a four-year antitrust investigation is being closed.
The agreement, which is binding for the next decade, noted that Apple had agreed to allow third-party wallet providers access to the NFC input on iOS devices free of charge, without having to use Apple Pay or Apple Wallet.
In terms of technology, Apple will enable access to NFC in Host Card Emulation mode (‘HCE’).
“HCE allows to securely store payment credentials and complete transactions using NFC, without relying on an in-device secure element,” wrote the EU regulators in their announcement.
In addition, Apple must “apply a fair, objective, transparent and non-discriminatory procedure and eligibility criteria to grant NFC access to third-party mobile wallet app developers.”
Additional commitments center on making it possible to initiate payments with HCE payment apps “at other industry-certified terminals, such as merchant phones or devices used as terminal (so called SoftPOS), if this is enabled.”
We note, too, that the pool of possible developers embracing NFC access is broadened as Apple has agreed to remove the requirement for developers to have a license as a Payment Service Provider or a binding agreement with a PSP to access the NFC input.
Developers will also be allowed to “pre-build payment apps” for third-party mobile wallet providers — which implies that the wallets could be a default option for users, which may boost competition against the Apple Wallet itself. For companies such as PayPal, which has its own tap-to-pay functions, or Samsung (with its wallet) and others, the third-party access to the same tech may be a boon to their own mobile payment efforts.
PYMNTS has reached out to Apple for comment, but had not heard back as of press time.
As for the App Store, earlier this month, and as noted in a tweet from Epic Games, and then in subsequent coverage, Apple has approved Epic Games’ marketplace app for iPhones and iPads in Europe. We reported last week that this approval comes after Epic Games, the creator of the popular game “Fortnite,” accused Apple of obstructing its attempts to establish a games store on Apple devices.
It might be argued Epic’s legal actions against Apple — stretching back to 2020 in the United States — have been “ground zero” for greater regulatory scrutiny of Apple’s in-app payments, fees and general structure of App Store access. Epic had charged that taking 30% commissions from in-app payments and other practices had established Apple as a monopoly.
The changes noted above are EU specific, but the tech giant is facing similar examination by regulators here in the States.
Back in March, the Justice Department filed a suit against Apple, and focused on allegations that the company has hobbled competition by restricting developers’ access to technology tied to content and to payments. The actions in Europe may presage at least some meetings of the mind/and commitments between Apple and regulators on contracts with developers.
In the meantime, as PYMNTS reported last month, Apple has announced new initiatives that are aimed at expanding the reach of Apple Pay and Apple Wallet beyond the iPhone or credit and debit. The payment functions are moving beyond the smartphone — and tap and pay — where new features will be accessible via other Apple devices (such as the iPad), and Apple Pay is being made available for Windows computers and through Google’s Chrome browser.
In those instances, then, Apple Pay becomes a payment option that can be used on PCs too. Elsewhere, banks will be able to offer financing options embedded in Apple Pay along with rewards points and programs.
Additionally, Tap to Cash with Apple Cash lets users send and receive Apple Cash by holding two iPhone devices together. Among the new financing options lies Affirm’s buy now, pay later service, to be made available when users check out with Apple Pay.
It remains to be seen what the puts and takes will be, as opening up Apple Pay to rivals in the EU comes at the same time that Apple Pay is somewhat decoupled from the phone themselves.
Apple’s services revenue growth has been at double-digit percentages year on year. But hardware, as seen here, has declined, as iPhone sales were down 10% year on year in the latest quarter. With the reshaping of the competitive landscape that’s to come, there may be some cracks in the foundation of the Apple ecosystem.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More