Use tap-to-pay on iPhone as UK seeks to cut Apple fees and allow rival apps

The UK government is proposing new regulations that would allow competitors to offer tap-to-pay payment services on iPhones, challenging Apple’s current monopoly in the region. This move targets the fees and technical restrictions that the Competition and Markets Authority believes are stifling innovation.

In plain English

Currently, if you use an iPhone in the UK to tap and pay for goods, you are using Apple Pay. There are no other options. The regulator says this is because Apple charges high fees for access to its payment technology and restricts how other companies can build their own payment apps. The goal of the new proposal is to force Apple to lower these costs and open up its technology so that banks and fintech companies can create their own competing payment methods.

The background

According to a press release on the UK government website, the Competition and Markets Authority (CMA) stated that Apple’s current rules and fees are blocking UK fintech firms from growing. The CMA noted that while several alternative payment services exist in the European Union, none exist in the UK. The regulator believes this disparity is caused by Apple’s higher charges and specific technical limitations imposed on third-party developers in the British market.

What changes now

The CMA is proposing that Apple allow third-party companies to use host card emulation technology for free, similar to the requirements already in place for the EU market. Currently, Apple requires firms in the UK to use its Secure Element for encryption, a condition the regulator wants to relax. The CMA stated it does not believe allowing host card emulation would create inherent security concerns. Mattias Eld, CEO of Fidesmo, commented that consumers should be able to choose how they pay without handing control of their wallet to a single company.

Key terms explained

Understanding this story requires knowing how digital wallets work on smartphones. Secure Element is a dedicated chip that stores payment data securely, isolated from the main operating system. Host card emulation is a software-based method that allows payment apps to run on the main processor. Regulators often debate which method offers better security versus greater competition. Teams usually evaluate these technologies based on encryption standards and user control over financial data.

What to do and how to stay safe: Apple

• Check with your bank to see if they have plans to launch alternative payment apps for iPhone users in the UK.
• Review your current payment methods to understand how your financial data is stored and processed by your device manufacturer.
• Monitor official communications from the Competition and Markets Authority for updates on the implementation timeline of these proposed rules.
• Once the vendor provides an update or new apps are released, verify that any new payment service uses strong encryption standards before adding your cards.

General security guidance from the Vector Update newsroom. It is not confirmed advice from the organisations named in this story.

Frequently asked questions

Why are there no Apple Pay alternatives in the UK?

The CMA states that high fees and restrictions on using certain encryption technology by Apple have prevented competitors from entering the market.

Is host card emulation less secure than the Secure Element?

The CMA stated it does not believe allowing host card emulation would raise any inherent security concerns.

How does this situation differ from the EU?

In the EU, rules require Apple to let companies use host card emulation for free, resulting in several available alternatives, whereas the UK currently has none.