UK regulator tells Apple to open iPhone NFC, cut fees

The UK Competition and Markets Authority proposed forcing Apple to open the iPhone's NFC technology to third parties and to ensure commercially viable, substantially lower fees.

The CMA said it has heard from UK businesses that "Apple's fees and rules are blocking UK fintechs and other businesses from innovating and growing."

The regulator proposed two main changes. First, Apple would have to provide access through both international contactless standards: secure element (SE), which stores data on the device, and host-based card emulation (HCE), which stores it off the device. Apple currently only offers SE in the UK.

The CMA said the evidence suggests neither standard raises inherent security concerns and that supporting both would let UK firms roll out payment services already available in the EU.

Second, the CMA said access must be commercially viable. The regulator will not set prices itself but has proposed principles for how fees should be determined and expects the resulting charges to be "substantially lower" than current Apple fees while still fairly rewarding the company.

The CMA said the change could enable digital IDs and age verification tools, digital car, hotel, and workplace keys, tickets and travel passes, and loyalty programs beyond payment apps.

The regulator pointed to the EU, where six months after Apple agreed to provide NFC access for payments, Vipps launched the first alternative payment app, followed by PayPal, Klarna, Curve, and BBVA. In the UK, the CMA said, "not a single firm has launched a wallet-type product to compete with Apple's."

The CMA noted contactless payments now make up 39% of all payments in the UK, up from 3% a decade ago, and that over 60% of adults use a digital wallet, with Apple Wallet the most popular.

Apple responded through a spokesperson, telling Reuters, "We do not believe the CMA should require Apple to adopt an approach with lower privacy and security protections," and that it "will continue to engage constructively to reach an outcome that is in the best interest of our users."

The CMA consultation closes on November 17. The proposal is a conduct requirement under the UK's Digital Markets, Competition and Consumers Act of 2024 and applies to Apple because it was designated as having Strategic Market Status for its mobile platform.