One of the elements of the Department of Justice lawsuit against Apple, brought a few days ago, concerns the NFC chip in the iPhone. This is the chip that powers Apple Pay, and the company won’t let outside firms use it, citing security and privacy reasons. It looks like that’s about to change, and Apple is secretly preparing for it now.
According to Bloomberg’s Mark Gurman in his latest Power On newsletter, the system, which has already changed in the EU, could soon change in the U.S., too.
The NFC chip is what makes Apple Pay so quick and effortless to pay for stuff by tapping your phone on a card reader. But Apple has jealously guarded access to this. After all, if a bad actor could get at it, there’s a severe risk they could get at your money, too. Since day one, Apple Pay has been seen as a highly trustworthy and secure way to pay.
It’s worth mentioning that by keeping the NFC chip locked, it protects the royalties Apple charges on each transaction, too. If a third-party finance company were allowed to use the NFC chip, it could charge its own royalty, leaving Apple out of the equation.
As Gurman reported almost two years ago, this is not a new issue: “Apple’s policy means PayPal and Square—as well as financial institutions like Chase, Citi and American Express—can’t launch tap-to-pay iPhone apps with their own features and interface. It also means if they want to access the iPhone user base, they must pay an up-to-0.15% fee for every Apple Pay credit card transaction.” He says that he has, “seen estimates of Apple Pay bringing in north of $1 billion per year on fees.”
For financial, safety and security reasons, then, you can see why Apple doesn’t want to open the chip up.
However, when the European Union introduced the Digital Markets Act in early March this year, one of the conditions was that Apple should offer access to the NFC chip. Citing security issues, Apple was wary of doing this, but reluctantly agreed.
Behind the scenes, perhaps because it fears it may be compelled to introduce similar freedoms elsewhere, change is underway.
As Gurman says, “Apple has already opened up NFC access in Europe, and I am told that engineering work to do so in the US is already underway.”
Which means that Apple is getting itself prepared, even if it hopes the day when it needs to implement it never happens. There’s no time scale here but if things go smoothly in the EU, and Apple will be working to ensure it does, then this seismic change could come to the U.S. in the coming months or years, too.
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2024-03-25 14:15:49Z
CBMiigFodHRwczovL3d3dy5mb3JiZXMuY29tL3NpdGVzL2RhdmlkcGhlbGFuLzIwMjQvMDMvMjUvYXBwbGUtc2VjcmV0bHktZW5naW5lZXJpbmctaXBob25lLWZvci1nYW1lLWNoYW5naW5nLXVwZGF0ZS10by1hcHBsZS1wYXktcmVwb3J0LWNsYWltcy_SAY4BaHR0cHM6Ly93d3cuZm9yYmVzLmNvbS9zaXRlcy9kYXZpZHBoZWxhbi8yMDI0LzAzLzI1L2FwcGxlLXNlY3JldGx5LWVuZ2luZWVyaW5nLWlwaG9uZS1mb3ItZ2FtZS1jaGFuZ2luZy11cGRhdGUtdG8tYXBwbGUtcGF5LXJlcG9ydC1jbGFpbXMvYW1wLw
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