UK asks Apple to widen access to its payment tech

UK smartphone users could benefit from new payment, ticket and travel apps if Apple widens access to its contactless payment tech, the competition watchdog says.

The Competition and Markets Authority (CMA) also wants the fees Apple charges firms to use its contactless tech to be "substantially lower".

It believes the iPhone maker's current fees and charges are "blocking" financial technology firms and others from innovating and growing - and is consulting on proposals it believes would cause these fees to fall.

Apple maintains that widening access could undermine security, and that its current arrangements do not stop innovation.

Nearly 2 in 5 payments are now contactless, the watchdog said, with nearly 60% of people using digital wallets - with Apple's the most popular in the UK.

In a statement Apple told the BBC that the current arrangements had permitted developers in the UK and around the world to securely offer contactless transactions directly within their apps, for everything from in-store payments and transit passes to car keys and event tickets.

"This solution enables developers and banks to create innovative products and services for their customers and facilitates competition between wallets, while ensuring users' sensitive data remains protected by the highest security standards".

"We do not believe the CMA should require Apple to adopt an approach with lower privacy and security protections. We will continue to engage constructively to reach an outcome that is in the best interest of our users."

Last year Apple warned UK regulators against following the same path as the EU which forced it to open up a range of its technologies to rivals.

However, the CMA argued that, unlike the EU, it is focused on ensuring the interoperability of particular aspects of Apple's tech, such as digital wallets and watches.

The proposed measures would force Apple to grant access to apps that make payments via a widely used alternative contactless technology standard, called Host Card Emulation (HCE), which the firm does not currently permit in the UK.

The UK is one of the world's leading fintech hubs, the CMA said, generating more than £214 billion in turnover and supporting more than 360,000 jobs.

But Apple's fees and rules contactless payments are restricting growth and innovation, it argued.

Changes could enable the development of a wide range of new products, such as account-to-account payments, digital IDs, travel passes and digital keys, it claimed.

The regulator said moves to open up the tech in the EU had resulted in the creation of new businesses.

In the six months since the EU forced Apple to widen access to its tech, an alternative payment app Vipps launched, followed by PayPal, Klarna, Curve, and BBVA.

Apple argues however that the these new apps could easily have been launched prior to the changes.

But in the UK not a single firm has launched a wallet-type product to compete with Apple's the watchdog argued.

The CMA said it was not proposing to set the price and terms Apple could demand for use of its devices contactless tech, but the effect of its plans would be that prices would fall.

Sarah Cardell, Chief Executive of the CMA said it had been told that high fees, strict terms, and technical restrictions relating to Apple's contactless technology made it too difficult for challengers to innovate and compete.

"By removing barriers to entry, we can help create the conditions for brilliant British businesses with great ideas to develop new products and services," she said.

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