Apple is not having a great time 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:
European regulators slapped Apple Monday with a “statement of objections”, arguing that Apple misuses its control over mobile payment. 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 has become almost universally used online for payment methods. This allows consumers to have one source of payment regardless of where they shop. Although it is possible to tap-to-pay on Android phones (as the complaint claims), not for iPhones.
Apple and PayPal both understandably prefer that consumers use their cards when using their services. All revenue is shared with card-issuing banks and/or financial institutions (Mastercard and Synchrony, Mastercard, and Goldman Sachs, for Apple) and keeps the cards in-house. Forbes 2021 article details Apple Pay, and its permutations. It is estimated that Apple Pay has cost banks $225 billion annually in payments. revenue. That’s a number almost big enough to get Washington’s attention. But I digress.
This somewhat complicated dance among financial institutions, card issuers and consumers comes down to convenience versus costs. A credit card is offered by very few financial institutions and retailers, including insurance companies. The retailer’s inducement is whichever bank is issuing the card waiving the fee customarily charged to merchants for card usage. A merchant will pass on a percentage of these savings to customers who use the card at their store. The merchant usually gives cashback in the form of one to three percent of the cumulative total for the year. There are other options, such as extra points for club memberships, discounted services or the CEO visiting once per year to wash your vehicle. This is what stores in Realville do: they constantly promote their cards to anyone who comes in.
When retailers calculate projected profit margins, they include the 1.4 percent to 3.5 percent fee card issuers charge them for the honor of their cards making registers ring in the retailer’s locations conveniently located to serve you. Guess where this fee ends up? You pay the cost. You’re now aware of the reasons that some shops still offer cash discounts.
Let’s return to the Apple-versus-Paypal quarrell. This issue should not be too concerning for consumers. Should PayPal get its way and forces Apple to allow its usage for tap-and-pay on iPhones, it’ll mean another way to spend money you don’t have on things you don’t need to impress people you don’t like. Sarcasm aside, given the current economy’s teetering nature between inflation, material shortages, and other supply chain issues, pretty much anything affecting any amount coming out of your wallet is worth monitoring–in case someone decides to nudge prices and/or fees even higher with the excuse of “we had to cover costs.”