A federal judge recently gave the green light for thousands of financial institutions to team up in an antitrust lawsuit against Apple. U.S. credit unions and banks argue that the technology company unfairly restricted mobile payment options on mobile devices to force unfair transaction charges. By granting class action status to this case, the courts are setting the stage for a massive legal battle over the future of digital wallets and processing fees.
Financial institutions claim transaction fees are unfairly inflated
Card issuers are pushing back against the specific charges tied to Apple Pay transactions. According to the original lawsuit filed in 2022 by Affinity Credit Union, GreenState Credit Union, and Consumers Co-op Credit Union, banks pay a premium every time someone checks out with their phone.
The legal complaint breaks down the costs as 0.15 percent of the total value for credit card purchases and half a cent for each debit transaction. This means a standard hundred-dollar purchase costs the card issuer fifteen cents. The banks point out that competing platforms on Android do not charge issuers these types of transaction fees at all.
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Judge allows the class action status and damages expert testimony
Judge Jeffrey White officially certified the class on September 23, meaning thousands of affected banks can combine their legal efforts into one massive case. He ruled that the courts can handle the core questions for the entire group of card issuers instead of dealing with each bank individually.
The judge also rejected an attempt by the defense to block testimony from the plaintiffs’ damages expert, Christopher Vellturo. Vellturo bases his financial estimates on the difference between the fees charged for transactions on the iPhone and the zero-dollar fees charged by alternative mobile wallets. While the defense challenged this logic, the judge stated the company is free to question those methods in court.
Recent software updates open the door for alternative payment options
The core of the initial complaint centered around the fact that third-party apps were blocked from using the built-in contactless payment hardware. However, the ecosystem began changing its approach starting with iOS 18.1 in 2024. Developers can now offer their own digital wallets for tap-to-pay transactions without having to route them through the standard system.
Even with these new software changes, the lawsuit regarding past payments will still move forward. Opening up the payment hardware does not erase the claims over the millions of dollars in fees that banks have already paid. Both sides are gearing up for a lengthy legal process that will ultimately decide if those past charges were unlawful and whether the banks are owed a massive refund.
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