CFPB takes aim at Apple over NFC chip access

Apple Pay is the only mobile payment service that may access the NFC ‘tap and go’ technology embedded on iOS mobile devices for payments in stores, a process that has been damned by banks and other payment providers in a number of jurisdictions for preventing competition from their own proprietary apps.

Last year, the EC charged Apple with restricting access to the NFC chip technology in a move that could eventually lead to fines worth billions of euros.

In an “Issue Spotlight” report, the CFPB has hinted at its own stance on the area, contrasting Apple’s policy with the more open approach taken by Google and placing it within the context of America’s shift towards open banking and the importance of platform interoperability.

The report notes that usage of tap-to-pay options in the US is predicted to hit $179 billion this year across Apple Pay, Samsung Pay, and Google Pay. Nearly half of iOS users – 55.8 million – made an in-store payment using Apple Pay in April 2023.

The restrictions on other firms’ access the NFC chip is therefore significant. Banks, retailers and the likes of PayPal and Square have a strong incentive to develop tap-to-pay apps for Apple devices, says the CFPB.

“But Apple’s NFC restriction policy prevents them from doing so, and ultimately eliminates the possibility of consumer choice in tap-to-pay on Apple devices.”

Apple having to compete head-to-head “could incentivise all of the providers to innovate, to develop new features and services that would keep their customers from switching,” says the report.

The CFPB dismisses Apple’s long-stated claim that its restrictive policy is needed to ensure privacy and security, saying that the firm could simply mandate that a third-party payment app seeking access to the NFC chip provide at least the same level of privacy as Apple Pay.

The report argues that any frictions on NFC access could “impede the shift towards open banking and, ultimately, negatively impact consumers — e.g. by reducing competition, innovation, choice, and ease of access”.

In addition: “Policies that impose restrictions on competition and raise consumer switching costs must be carefully scrutinised.”