PayPal Challenges Apple’s Mobile Payment Monopoly on iPhones

Apple has not been having the best go of it lately. First, there were some of its employees openly revolting when told they’d need to return to the office, some going so far as to label the requirement racist. Now, a Europe-based legal challenge seeks to force Apple’s acceptance of PayPal on the iPhone as a mobile payment method alongside Apple Pay. From Bloomberg via Slashdot:

Apple was issued a statement of objections Monday by European regulators. It argued that the iPhone maker abuses its control over mobile payments. The complaint centers on the company reserving the iPhone’s tap-to-pay abilities for its own Apple Pay service, rather than letting rival payment platforms use the feature.

PayPal is almost universally used online for payment. It allows consumers to have a single payment source online, regardless of where they shop. It is available as a tap-to-pay option on Android phones but, as the complaint states, not on iPhones.

Apple and PayPal want consumers to use their cards in conjunction with their services. This keeps everything in-house, save for the shared revenue with the card-issuing companies and/or financial institutions involved (Mastercard and Synchrony for PayPal, Mastercard, and Goldman Sachs for Apple). A 2021 Forbes article details how Apple Pay and permutations thereof are estimated to be costing banks $250 billion in payments; i.e. revenue. That’s a number almost big enough to get Washington’s attention.

It all comes down to convenience and cost. It is usually one to three percentage points of your cumulative total for the year. Bonus points can be earned for joining the in-store club and receiving discounted or free services.

When calculating their profit margins, retailers include the 1.4-3.5 percent card issuer fee. They can honor your cards and set up registers at convenient locations so you don’t have to pay any extra.

Let’s get back to the Apple versus PayPal issue. It is possible that Apple will win and allow tap-and-pay for iPhones. This will allow consumers to spend money they don’t have on things that aren’t necessary. Inflation, shortages, and other supply chain issues all present a concern. It is worth paying attention to any fee or price that may impact your wallet.