On July 18, Seattle-based firm Hagens Berman sued Apple for $1 billion in the U.S. District Court for Northern California, alleging that the tech company’s Apple Pay fees violate federal antitrust laws. The class named in the suit is U.S. credit unions and financial institutions that issue payment cards enabled for use in the Apple Pay mobile wallet.
The filing alleges that Apple prevents rival companies from accessing the technology required to develop a competing mobile wallet for iOS devices, thereby ensuring that only Apple Pay can make contactless payments at the point of sale (POS). Operating with this alleged monopoly, Apple “charges card issuers . . . supracompetitive fees for a service that is available on Android devices for free,” according to a Hagens Berman statement describing the case.
Firm cofounder and managing partner Steve Berman said payment card issuers pay nothing to include a contactless payment option using mobile wallets for Android devices, because of competition between services such as Google Pay and Samsung Pay. But “the same service . . . costs them [payment card issuers] a collective $1 billion annually through Apple Pay.”
To use the Apple Pay platform, Apple charges U.S. card issuers 15 basis points on credit and 0.5 cents on debit for all transactions. In the words of the suit, “that Apple has profitably sustained its significant issuer fees, despite other free forms of payment, demonstrates that a hypothetical monopolist can . . . profitably impose a small but significant non-transitory increase in price (a SSNIP).”
Apple assesses the same platform fees for e-commerce transactions, preventing card issuers from disabling Apple Pay’s e-commerce function from the tap-and-pay feature. And on top of it all, Apple blocks card issuers from passing the service fees on to consumers.
This is Hagens Berman’s third suit against Apple for antitrust matters. In 2015, the firm secured a combined $560 million settlement against Apple and publishing companies over price-fixing of e-books. In 2022, Hagens Berman won a $100 million verdict in favor of iOS developers who were harmed by Apple’s App Store policies.