Apple has successfully secured the dismissal of a federal lawsuit accusing it of conspiring with Visa and Mastercard to suppress competition in the payments network industry and inflate merchant transaction fees (via Reuters).
The Southern District of Illinois ruled in favor of Apple, Visa, and Mastercard in the case brought by Illinois-based beverage retailer Mirage Wine & Spirits and other merchants, which alleged that Apple had entered into anticompetitive agreements with the two major card networks. The plaintiffs claimed that Visa and Mastercard made ongoing payments to Apple, described as "a very large and ongoing cash bribe," to ensure Apple would not build its own rival payment network.
According to the complaint, these payments amounted to 0.15% on the value of all U.S. credit transactions and 0.5 cents on each U.S. debit transaction processed through Apple Pay on the Visa and Mastercard networks. The plaintiffs argued that the arrangement disincentivized innovation, preserved high transaction fees, and ultimately harmed merchants by limiting competitive pressure in the payments ecosystem.
Since its launch in 2014, Apple Pay has relied on existing card networks, including Visa, Mastercard, and American Express, to process transactions. Similarly, Apple Card is operated on the Mastercard network. Likewise, Apple Cash uses Visa's network.
In the original complaint, plaintiffs argued that Apple's long-standing exclusive reliance on these networks constituted evidence that the company had foregone competition in exchange for a steady stream of payments. They further alleged that Apple's control over its iPhone's near-field communication (NFC) hardware, which facilitates tap-to-pay transactions, effectively blocks third parties from launching alternative payment solutions on the device, further entrenching Visa and Mastercard's market position.
The court concluded that the plaintiffs had failed to provide sufficient factual allegations to support their claims, saying that they were largely circumstantial and speculative. The judge noted that Apple's existing agreements with Visa and Mastercard included language that explicitly preserved Apple's right to compete with them. He also pointed to the inherent complexity, risk, and cost associated with launching a new payment network as additional context undercutting the plausibility of the plaintiffs' claims.
While the current version of the lawsuit has been dismissed, the plaintiffs have been granted 30 days to amend their complaint and refile a second amended class action complaint. If they do not meet this deadline, the case will be dismissed with prejudice.
