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An Illinois merchant’s allegations that Apple Inc., Mastercard Inc., and Visa Inc. worked to artificially maintain pricing by agreeing to funnel Apple Pay transactions via the two card networks was dismissed this week by a judge in the U.S. District Court for the Southern District of Illinois.
Filed in December 2023, the complaint claimed Apple Pay, operated by Apple on its iPhone devices, “had the power to disrupt the Entrenched Networks’ dominance and restore competition.” Plaintiffs said the card networks were concerned the mobile-payment service would disrupt their networks by driving down fees charged to merchants. It also claimed Apple agreed to work with the networks to send Apple Pay transactions over their systems rather than create an independent payment network.
The complaint alleged that, by the early 2010s, Apple was situated to enter the point-of-sale network arena, but opted to work with the card brands instead of building its own network or using that of PayPal Holdings Inc. In exchange, the two large card networks—Mastercard and Visa —would agree to pay Apple fees for access to the network.
In the dismissal, the court says the allegations “are too speculative” and lacked evidence to support them. The ruling also says that while Apple may have been uniquely positioned to benefit from disintermediating the card networks with the formation of Apple Pay, “their allegations completely ignore the difficulties, costs and time, risks, and potential for failure associated with such an endeavor.”
The ruling also says that Apple denied ever having plans for its own payment network, claiming the plaintiff’s argument it could do that was insufficient. Visa and Mastercard also denied that Apple was paid “cash bribes,” as the plaintiffs alleged, and that these fees were part of ordinary business.
The card brands, in particular, have faced similar suits in the past.
“Such claims of duopolies and antitrust against the brands are far from new, and hardly a surprise that this latest attempt has failed,” Cliff Gray, principal at Gray Consulting Ventures LLC, tells Digital Transactions News. “Among other weaknesses in the litigant’s case, it’s tough to argue the fundamental accusation when numerous alternatives continue to compete with the brands. ACH, RTP and FedNow, account-to-account services, and now stablecoins all represent reasonable, competitive approaches to traditional credit/debit cards.”
The complaint was filed by Mirage Wine & Spirits Inc. as case 3:23-cv-3942.
