Troubles of global technology major Apple are set to swell after a payment card gateway dragged the company to court accusing the iPhone maker of abusing its market power in mobile devices to thwart competition for its Apple Pay mobile wallet.
According to a complaint filed in San Francisco federal court, Apple ‘coerces' consumers who use its smartphones, smart watches and tablets into using its own wallet for contactless payments, unlike makers of Android-based devices that let consumers choose wallets such as Google Pay and Samsung Pay.
The plaintiff, Iowa's Affinity Credit Union, said Apple's anticompetitive conduct forces the more than 4,000 banks and credit unions that use Apple Pay to pay at least $1 billion of excess fees annually for the privilege.
It also said Apple's conduct minimizes the incentive for the Cupertino, California-based company to make Apple Pay work better and make it more resistant to security breaches.
“Apple's conduct harms not only issuers, but also consumers and competition as a whole,” the complaint said. The lawsuit seeks unspecified triple damages, and a halt to Apple's alleged anticompetitive conduct.
The company already faces a possible heavy fine after European Union regulators on May 2 said it had abused its dominance in iOS devices and mobile wallets by refusing to give payment rivals access to its technology.
According to the complaint, Apple charges issuers a 0.15% fee on credit transactions and a flat 0.5 cent fee on debit transactions using Apple Pay, while Android-based rivals charge nothing.
The plaintiff is represented by the law firms Hagens Berman Sobol Shapiro and Sperling & Slater. Last August, they helped obtain a $100 million settlement for smaller iOS developers that claimed Apple overcharged them on commissions.