Apple has agreed to allow competitors access to its contactless payments technology on iPhones, following pressure from European regulators. This decision means iPhone users will no longer be restricted to using the Apple Pay mobile wallet.
This move highlights the increasing regulatory scrutiny Apple (AAPL) faces in the European Union, where it is also at risk of a substantial fine for allegedly violating the bloc’s Digital Markets Act.
The European Commission, the EU’s executive body, announced these changes on Thursday. They aim to enhance competition in mobile payments on iPhones.
Margrethe Vestager, the EU’s competition chief, said, “iPhone users will now be able to use their preferred mobile wallet for in-store payments while retaining all the iPhone functionalities, including double click, tap-and-go, and Face ID.”
Apple has until July 25 to implement these changes, which will be in effect for 10 years across the 30 countries in the European Economic Area.
The agreement stipulates that third-party mobile wallet developers will have free access to the near-field communication (NFC) technology used for contactless payments on iPhones. Additionally, iPhone users will be able to select their default mobile wallet.
Apple stated to CNN, “Apple is providing developers in the European Economic Area with the option to enable NFC contactless payments and transactions for various uses, including car keys, transit, corporate badges, home keys, hotel keys, merchant loyalty/rewards, and event tickets within their iOS apps.”
“Apple Pay and Apple Wallet will continue to be available in the European Economic Area for users and developers,” the statement added.
The European Commission initially raised concerns about Apple’s tap-to-pay practices in 2022, following a formal antitrust investigation into Apple Pay that began two years earlier.
Regulators concluded that Apple had abused its dominant market position by restricting access to the NFC technology essential for making mobile payments. This restriction prevented rivals from developing apps or wallets using iPhone’s tap-to-pay features, forcing users to rely solely on Apple Pay.
Vestager commented, “From now on, Apple can no longer use its control of the iPhone ecosystem to keep competing mobile wallets out of the market. Competing wallet developers and consumers will benefit from these changes, promoting innovation and choice while maintaining secure payments.”
However, these commitments do not apply to Apple Watches. Vestager noted, “Our impression was that the number of people who use Apple Watches for payments is rather small,” indicating there was “limited harm done” by excluding these devices.