UK Lawsuit Targets Apple Pay Practices with $2 Billion Consumer Harm Claim

A major legal challenge has been filed against Apple in the UK, seeking £1.5 billion ($2 billion) in damages over allegations that Apple Pay's business model harmed consumers. The lawsuit, led by Fairer Finance founder James Daley, claims Apple's restrictive approach to its payment system created anticompetitive conditions that ultimately forced banks to pass hidden costs to virtually all UK banking customers.

According to Daley, Apple's control over NFC technology on iPhones allowed the company to impose fees on banks for processing Apple Pay transactions—fees that don't exist for Android-based payments. "By shutting out competition and charging hidden fees, Apple has pushed up costs for millions of consumers," Daley stated. "Shockingly, this doesn't just affect Apple Pay users or iPhone owners. Banks have passed these costs on to all customers."

Apple has firmly rejected the allegations, calling the lawsuit "misguided" and requesting its dismissal. In an official statement, the company emphasized: "Apple Pay is a seamless and secure way for users to make contactless payments, and one of many payment options available to consumers. Apple does not charge fees to consumers or merchants for using Apple Pay, and banks see meaningful benefits from offering Apple Pay to their customers—most notably fraud reduction." Apple also noted it has recently opened NFC access to third-party apps in the UK, allowing alternative payment solutions.

Implications for Developers and Ecosystem

• NFC Access Restrictions: Historically, Apple blocked third-party apps from accessing iPhone NFC hardware for payments, forcing banks to integrate exclusively through Apple Pay APIs. This lawsuit challenges whether that restriction constitutes anticompetitive behavior.
• Bank Fee Structures: Financial institutions pay fees to Apple for each Apple Pay transaction (typically 0.15% of credit card payments). While Apple argues these fees fund security and fraud prevention, the lawsuit claims they inflate costs across the entire banking system.
• Cross-Platform Disparity: Unlike Android, which allows banks to implement contactless payments without platform fees, iOS developers remain dependent on Apple's payment infrastructure. This case could pressure Apple to further open its NFC stack.

Regulatory Context and Potential Outcomes

This lawsuit arrives alongside ongoing investigations by UK regulators like the Competition and Markets Authority (CMA) and Payments Systems Regulator (PSR) into digital wallet practices. If the Competition Appeal Tribunal allows the case to proceed, it could force Apple to:

1. Reduce or restructure fees charged to banks
2. Accelerate NFC access for third-party payment apps
3. Implement clearer cost-disclosure policies

Such changes might enable developers to build payment alternatives without Apple's intermediation, potentially lowering integration costs for financial services. However, Apple maintains that its closed model ensures superior security—a claim supported by lower fraud rates in Apple Pay transactions.

The tribunal is currently evaluating whether the class action meets the criteria for a full hearing. A ruling in favor of the plaintiffs could set a precedent affecting Apple's operations globally, particularly in markets with similar competition laws like the EU and Australia. For now, Apple continues defending its ecosystem as a value-driven solution, while critics argue its fees represent a hidden tax on the broader economy.

What’s your perspective? Does Apple Pay’s convenience justify its business model, or do the alleged hidden costs concern you? Share your thoughts in the comments.