As Apple faces continued waves of regulation, Apple Pay is about to open up in Europe, allowing rival payment services to gain access to the NFC chips inside iPhones to enable one-click payments.

The motivation behind forcing Apple to open up is to stimulate competition in the mobile payments space. It should enable rival services to offer mobile payments and settles a long-running dispute between Apple and the European Commission. 

What this means to Apple Pay

Under the arrangements, Apple will allow third-party wallet providers access to the NFC chip inside iOS devices without requiring them to use Apple Pay or Apple Wallet. It means rivals can now compete directly with the Apple service, and in theory means customers can choose a payment system they prefer. This relies on an extensive number of commitments, captured in a 36-page document published today.

What Europe says

"From now on, competitors will be able to effectively compete with Apple Pay for mobile payments with the iPhone in shops," Margrethe Vestager, executive vice president in charge of competition policy, said in a statement. "So, consumers will have a wider range of safe and innovative mobile wallets to choose from."

EC authorities have put some steel around the agreements. They will by law remain in force for 10 years and apply throughout the EEA. "Their implementation will be monitored by a monitoring trustee appointed by Apple who will report to the Commission for the same time period," the European Commission said.

In the event Apple fails to keep its commitments, it faces a fine of up to 10% of its total annual turnover without having to find an infringement of EU antitrust rules, or a "periodic penalty" payment of 5% per day of its daily turnover for every day of non-compliance.

How will it work?

A look at the 36-page agreement suggests how the new system will work. First, developers of payment systems will need to obtain entitlements to access a series of APIs Apple will make available to support rival payment systems, but only those operating in the European Economic Area. 

The company will also work to support evolving standards; developers will be subject to developer fees, but no fees related to the use of the NFC system. That sounds like Apple will not receive a cut of payments made.

For consumers, it will be possible to choose a preferred payment system (including Apple Pay) with a new section in Settings. The iPhone will also maintain a register of installed payment apps that want NFC access, and you'll be able to select which one to use, rather like rifling through payment cards in your real wallet.

You'll also be able to use Apple Pay on Apple Watch and choose another system for your phone.

What about disputes?

If a developer/payment provider thinks they aren't getting fair treatment from Apple, they will be able to submit a written complaint to the monitoring trustee. Appointed and reimbursed by Apple and approved by the European Commission, the trustee will be an independent party who monitors the company's compliance to the agreement.

The trustee may recruit a support team of up to three advisors, and there are strict controls in place to prevent trustees running off to work for Apple or its competitors within a certain time frame. There will also be an Appeal Board to adjudicate in the event a dispute requires independent oversight. 

What about the DMA?

Apple's decision to reach a constructive settlement concerning Apple Pay in Europe could yet turn out to be a harbinger of similar future detente regarding Europe's Digital Markets Act. While recent statements from Vestager suggest she has little empathy for Apple's arguments, the company has already revised some of the arrangements it proposed to bring its business practises into line with the DMA or similar rules looming in other nations.

There's no reason to think it won't continue to reach a constructive, if unenthusiastic, dialogue. It does remain open to question whether the agreements will go far enough for Europe or for some of the company's loudest critics. 

But for the next decade, at least, you'll be able to use whatever payment system you like across the European bloc as easily as you may already use Apple Pay.

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