Companies want EU rules for open access to NFC for payment service providers

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It seems likely that the EU will eventually come up with rules that oblige companies behind technical infrastructures for payment services to give all service providers access. These considerations seem to focus in part on Apple’s shielding of the NFC chip in iPhones.

The European Commission has published the results of a consultation on a new retail payments strategy. A large part of the responding parties consider regulating ‘access to technical infrastructures for payments’ to be problematic for only a few Member States. The desire is to achieve a level playing field. The parties believe that EU law should oblige companies behind relevant technical infrastructures to provide access to that infrastructure to all payment service providers, on reasonable terms. The considerations are about NFC, biometric identity scanners such as fingerprint scanners, app stores and SIM cards.

The idea is that this will lead to ‘a competitive and innovative contactless payment market in Europe’, where service providers can ‘compete on services rather than technology’. A third of the responding parties did point out that mandatory open access could entail security risks, but they immediately stated that this problem can be contained by, for example, ultramodern security measures and good supervision.

Apple is not specifically mentioned on this topic, but it is clear that these considerations focus primarily on Near Field Communication. Bloomberg reports that the EU has indicated that the ‘most reported problem’ has to do with smartphone manufacturers limiting access to their NFC chips to third parties.

That point of third-party restrictions is addressed with iPhones and the Apple Watch; users of these devices can only make NFC payments via Apple Pay, which means, for example, banks cannot use the functionality in their own iOS apps. This restrictive policy of Apple, for example, has been a thorn in the side of the German government for some time. IPhone users can only make contactless payments via the NFC chip with Apple Pay and Germany has enacted a law to enforce that Apple gives other parties equal opportunities. Apple was not happy about this. The company indicated at the time that mandatory opening could endanger the privacy of the user and the security of financial data.

In this context, the European Commission started an investigation into Apple Pay in June. The Commission suspects that Apple’s payment service is in violation of EU competition rules, given the conditions that Apple imposes on companies before they can integrate Apple Pay into their online stores. The European Commissioner for Competition, Margrethe Vestager, also criticized the way Apple limits the ‘tap and go’ functionality of the NFC chip in iPhones to its own services.

In total, approximately 390 stakeholders responded, with 45.5 percent of responses coming from industry sector companies and 24.9 percent from corporate advocacy groups. Public authorities accounted for 12.2 percent of responses and 9 percent were responses from EU citizens. This is a consultation round, which does not create any further obligations for the legislative process within the European Union. In view of the Commission’s general desire to promote competition and a level playing field, the likelihood is considerable that these considerations will also underpin new rules.

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