For years, Apple maintained a tight grip on its NFC chip. However, pressure from EU regulators, who deemed Apple’s practices anti-competitive, has forced the tech giant to relinquish some control. The implications of this move are far-reaching, extending beyond payments to encompass a wide array of NFC-based applications. A clearer picture is emerging of a future where our mobile devices become the central hub for our financial lives and digital identities, enabling us to seamlessly transact, authenticate, and access services with a simple tap.

In the realm of payments, Apple’s NFC policy changes are poised to fuel competition and innovation, leading to the emergence of new mobile wallet providers and a more diverse payments landscape. Consumers will benefit from greater choice and potentially lower transaction fees, while merchants will have access to a wider range of payment acceptance solutions. Existing payment apps are also likely to integrate NFC capabilities, allowing users to make contactless payments directly from their devices.

The implications of this move are far-reaching, extending beyond payments to encompass a wide array of NFC-based applications. A clearer picture is emerging of a future where our mobile devices become the central hub for our financial lives and digital identities, enabling us to seamlessly transact, authenticate, and access services with a simple tap.”

However, the real game-changer lies in the potential for digital identification. Apple’s NFC technology, particularly its Secure Element (SE), could become the foundation for a secure and widely adopted digital ID system. The SE’s tamper-resistant hardware and the integration of biometric authentication create a formidable security framework for storing and managing sensitive ID data.

However, this transition will also present challenges. Interoperability between different wallet providers and NFC applications will be crucial to ensure a seamless user experience. Industry collaboration and the establishment of clear standards will be essential to avoid fragmentation and confusion in the market.

Apple’s NFC policy changes signal a move towards a more open and interconnected mobile ecosystem, where our devices play an increasingly central role in our digital lives. While the full implications of this shift remain to be seen, one thing is clear: the mobile landscape is undergoing a fundamental transformation, and the future is ripe with possibilities.

EU Antitrust Concerns

In July 2024, after an investigation into Apple’s NFC practices, the European Commission (EC) concluded that Apple’s restrictions violated EU antitrust rules. The EC found that Apple held a dominant position in the market for mobile wallets on iOS devices, and that its refusal to grant third-party developers access to NFC constituted an abuse of this position. Specifically, the EC found that Apple’s actions stifled innovation and limited consumer choice.

Apple’s Commitments to the EU

To address the EC’s concerns, Apple agreed to a set of legally binding commitments to ensure fair competition in the mobile payments space. These commitments included:

• Granting third-party wallet providers free access to NFC on iOS devices, without requiring the use of Apple Pay or Apple Wallet.
• Allowing apps to access NFC in Host Card Emulation (HCE) mode, which enables secure storage of payment credentials and completion of transactions via NFC without relying on a device’s secure element.
• Establishing fair and transparent procedures for granting NFC access to third-party developers.
• Ensuring user flexibility by allowing users to set an HCE payment app as their default for in-store payments.
• Creating an independent review mechanism to monitor Apple’s access decisions and resolve disputes.
• Applying the commitments to all iOS users with an Apple ID registered in the European Economic Area (EEA) and to all EEA-based app developers.

Following a market test, Apple made additional commitments, including:

• Extending payment initiation capabilities for HCE payment apps to include more types of industry-certified payment terminals.
• Allowing developers to combine HCE payment functions with other NFC use cases.
• Removing licensing requirements for developers to use the NFC system.
• Granting NFC access to developers for pre-building payment apps for third-party mobile wallet providers.
• Committing to maintaining the HCE architecture according to evolving industry standards.
• Simplifying the setup process for default payment apps.
• Ensuring compliance with industry standards and protecting confidential information during audits.
• Agreeing to a shorter dispute resolution timeline.

Implications for Merchants

• Apple’s NFC policy changes on are expected to offer EU merchants by increase competition and innovation in the mobile wallet space, leading to new features and services, potentially offering more options to consumers and merchants.
• Existing payment apps will be promoted to integrate NFC capabilities in the near future, allowing users to make tap-and-go payments directly from their devices.
• Require merchants to adapt their point-of-sale (POS) systems to support multiple mobile wallet providers. That could create additional complexities, but the technology integration will be easy as it runs on an existing solution.
• The change will also create new opportunities for strategic partnerships between merchants and emerging mobile wallet providers. You could expect tighter marketing integrations between some of the services and even own branded wallets ( e.g. for supermarket chains or loyalty apps)
• Potentially the move from Apple will accelerate the adoption of mobile payments, leading to a decrease in the use of traditional payment methods.

Apple Expands NFC Access Beyond EU

In a surprise move, in August 2024, Apple announced it would voluntarily grant access to its NFC technology to developers in countries outside the EU, including Australia, Brazil, Canada, Japan, New Zealand, the UK, and the US. This move suggests a strategic shift by Apple, potentially in response to the EU’s regulatory actions and the growing demand for NFC access in other markets.

This expansion, however, differs from the EU agreement. While the EU focused on enabling NFC payments via HCE architecture, Apple is granting access to the Secure Element (SE) through dedicated APIs.

The SE is a tamper-resistant hardware component designed to securely store sensitive information, such as cryptographic keys. This broader access could have significant implications for the development of various NFC-based applications beyond payments, such as digital identity, car keys, and transit passes.

Potential for Digital ID

Several sources emphasize the potential for Apple’s NFC technology to be used for digital identification (ID) purposes. The move to the API allows Apple to move to the role of human agent verification ( a check on the humanness) .  The combination of biometric multifactor authentication in the device and the secure storage of ID data within the device’s SE is seen as a potential “gold standard” for digital Identity. Apple will be able to provide both with its mobile devices.  Crone Consulting estimates that Apple could generate significant revenue from selling ID services, potentially reaching $50 billion annually.

Impact on the Wider Mobile Ecosystem Forum

Apple’s opening its NFC technology, both within and beyond the EU, is likely to have a profound impact on the wider mobile ecosystem forum. Overall, the mobile ecosystem will need to adapt to these changes, addressing both the opportunities and the challenges they present. This will require collaboration between industry stakeholders, including device manufacturers, app developers, payment providers, and regulators, to ensure the development of a secure, interoperable, and innovative mobile ecosystem. It is an exciting time for the players in the mobile payments and mobile identity markets. Here is a list of the main topic to review in the market:

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