skip to main content

A Fee Arrangement Lies at the Heart of a Lawsuit Against Apple, Mastercard, and Visa

Digital Transactions

An Illinois merchant has filed suit against Apple Inc., Mastercard Inc., and Visa Inc., alleging their efforts to develop Apple Pay prevented competition.

Filed last week by Mirage Wine + Spirits in the U.S. District Court for the Southern District of Illinois, the suit specifically claims the agreements among the three parties protected “their anticompetitive market division by insulating their agreement from competition.” Neither Apple, Mastercard, nor Visa had responded to a Digital Transactions News inquiry by deadline.

The complaint alleges that, by the early 2010s, Apple was situated to enter the point-of-sale network arena, but opted to work with the card brands instead of building its own network or using that of PayPal Holdings Inc. In exchange, the two dominant card networks—Mastercard and Visa—would agree to pay Apple fees for access to the network.

In October, PayPal announced its PayPal- and Venmo-branded cards could be added to the Apple Wallet on iPhones.

The suit also claims that the agreements Apple made with the two card brands would protect “their market division from competition by blocking third parties from access [to] certain hardware in the iPhone, namely the iPhone’s ‘Secure Element.’”

The secure element is the technology containing a cryptographically protected storage chip that connects via near-field communication wireless technology with point-of-sale terminals and other NFC-equipped devices. NFC, or near-field communication, is the technology behind contactless transactions.

Read More – Source