Apple faces legal troubles over its ‘deal’ with Visa, Mastercard

A class action lawsuit has accused Apple, Visa, and Mastercard of conspiring to limit competition for point-of-sale payment card services. According to Reuters, the lawsuit alleges that this has resulted in merchants paying higher fees for credit and debit transactions, which are artificially inflated.

Mirage Wine & Spirits, a beverage retailer in Illinois is suing companies on behalf of all merchants in the United States who accepted Apple Pay as a payment method at physical point-of-sale.

The complaint claims that Apple made a deal with Visa and Mastercard, which eliminated any incentive for the company to create a competing point-of-sale transaction payment network or allow other companies to use the iPhone's "tap to pay" NFC functionality with third-party wallet apps. And, Apple's own wallet app is the only option on the iPhone. This, according to the suit, has resulted in inflated merchant fees.

According to the lawsuit, Visa and Mastercard offered a significant amount of ongoing cash to Apple in exchange for agreeing not to compete with them. This cash bribe was a percentage of the transaction fees for credit and debit card payments made with Apple Pay. The lawsuit alleges that these payments are essentially a "large and ongoing cash bribe," amounting to hundreds of millions of dollars annually.

The lawsuit seeks to hold these companies accountable for their actions and ensure fair competition in the marketplace.

This is not the only lawsuit on Apple over its payment system. Apple has also been sued by payment card issuers for forcing iPhone users to use its Apple Pay mobile wallet, with Venmo and Cash App accusing Apple of stifling competition for peer-to-peer payments. A US judge has recently ordered Apple to face these allegations in court.

Last year EU antitrust regulators have also accused Apple of hindering rivals' access to tap-and-go technology. Though, Apple has reportedly offered its mobile payments systems to its competitors to resolve EU charges.

Visa and Mastercard faced a lawsuit over transaction fees. An appeals court upheld a $5.6 billion antitrust settlement with more than 12 million retailers claiming that the companies unlawfully fixed credit and debit card fees.

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