PayPal Contests Apple Pay’s Monopoly on iPhone Mobile Payments

Apple hasn't had the best time recently. For starters, some employees were openly resentful when they were told they had to return to work, a few even going as far as calling the requirement to return a racial slur. Also, a legal challenge is seeking to force Apple to accept PayPal as an option for iPhone mobile payments in conjunction with Apple Pay. 

European regulators went up against Apple by releasing a statement of opposition on Monday, alleging the iPhone manufacturer is infringing antitrust regulations with its control over iPhone mobile payments. The complaint focuses on Apple's decision to restrict the ability to make payments on its mobile wallets to its Apple Pay service rather than letting other payment platforms utilize the feature.

PayPal is a popular online payment method that gives consumers the ease of using one payment method regardless of the online retailers from which they purchase. PayPal is accessible in the form of a tap-to-pay option on Android phones, but as stated in the complaint, it's not available on iPhones. Apple and PayPal are both very much in favor of permitting users to utilize the cards that they provide as part of their services. It keeps everything in-house except for the revenue shared with the card issuers and/or financial institutions (Mastercard and Synchrony are for PayPal as Mastercard and Goldman Sachs are for Apple). A 2021 Forbes article described how Apple Pay and permutations thereof will cost banks around $250 billion in payment revenue. This is a figure that's almost enough to draw Washington's attention.

The somewhat tinny dance of the card issuers, financial institutions, and consumers comes down to cost versus convenience. A small number of major companies and financial institutions, such as insurance companies, are not able to offer any kind of credit card. The incentive for the retailer is that the bank that issues the card will waive the usual fee due to the merchant’s connection with the bank through the use of the card. The retailer then passes on some of these savings to customers who use the card at its establishment. This usually takes the form of cashback, often between 1 and 3 percent of the annual total for a year. Other options include bonus points when a customer purchases a club membership, discounts on services as well as the CEO who visits once per year to clean your vehicle. In Realville, this is the reason why shops and other establishments offer a card that they constantly show to every person who walks through the doors.

When retailers calculate their anticipated profit margins, they consider those 1.4 percent to 3.5 percent fees that credit card companies charge for the use of their cards, making registers ring at the retail stores conveniently situated to serve you. Guess where that fee is going to end up! In the price you pay. This is why some stores still offer discounts for cash purchases.

Returning to the Apple and PayPal controversy: The subject isn't too important to consumers. If PayPal succeeds and forces Apple to allow its use for pay-by-tap on iPhones, this could be another option to spend cash you don't have on items you don't really need to attract people you don't want to attract. In light of the current state of the economy, which is teetering between material shortages, inflation, and supply-chain problems, anything that affects the amount that is withdrawn from your bank account is worth monitoring in the event someone decides to raise the price or charge higher fees, citing the reason as “we had to cover costs.”

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