“The payment technology used in iPhones would not guarantee seamless and user-friendly payments in the digital euro system,” wrote Piero Cipollone in a letter to EU antitrust chief Margrethe Vestager this week.
According to him, the heart of the problem is contactless payments in the future digital euro in offline mode, where the payment method of iPhones is not sufficiently cooperative with the other participants in the transaction. “The current system used by Apple may not support offline payments for any digital form of the ECB,” Cipollone added.
Apple is currently coordinating with the European Commission the parameters of its operation in the future digital euro system. The project has been in the preparatory phase since last November, which should last two years, during which the rules of the game will be set for the digital currency and the participants of this payment system.
Specifically, a member of the ECB board blames the American side for denying transaction participants access to the so-called secure element of contactless payments through NFC technology within the framework of its current proposal. In short, it works like a miniature safe in mobile devices and some credit cards.
At the same time, a member of the ECB’s executive board wants Apple to change the way iPhone payments work to support a potential digital euro. “Paying with an iPhone in a digital euro environment would not necessarily offer the same level of authentication and speed as is currently common for Apple Pay,” said Cipollone.
According to him, the problem that users would feel, for example, as a slowdown in payment transactions, could manifest itself in ordinary payments in shops or between individuals. At the same time, the letter is addressed to the antimonopoly office primarily because Apple, with its technological concept of payments, would violate the equality of conditions on the market and would thus have an unfair advantage.
As Appleinsider.com reports, the European Commission has so far been ready to approve Apple’s proposed conditions for participation in the digital euro as early as next month. But the latest letter from the European Central Bank may derail this process. Apple’s relations with the commission have not been optimal for a long time. Since 2019, the European Commission has been investigating Apple Pay, also due to suspicions of an unfair advantage compared to third-party payment operators on iPhones.
If the European Commission were to find Apple guilty of anti-competitive behavior, the technology company would have to pay a hefty fee, which, according to the portal, could be up to a tenth of Apple’s worldwide annual turnover, which corresponded to a sum of around forty billion dollars. Apple later proposed changes to its iOS operating system to the commission, hoping to meet the conditions set by European competition legislation. ECB councilor Cipollone responded to this latest Apple proposal from this January.
According to the ECB, the digital euro should be an electronic means of payment that would be available to everyone free of charge and could replace cash. “Just like cash today, you could use it anywhere in the eurozone and it would be safe, including protecting your privacy,” the European Central Bank says on its website. According to economists, one of the practical effects of the digital euro could be lower fees on non-cash payments than is currently the norm.
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Interview for FLOW with economist Miroslav Singer • e15
