More competition in payment transactions: specifications for Apple Pay

Since this is a technically complex process, the MPs asked the Federal Ministry of Finance (BMF) to evaluate the law after some time. The BMF has now created it and sent it to the Finance Committee. The report is available to the Handelsblatt.

This is about the Payment Services Supervision Act (ZAG). This should curtail Apple’s market power by the end of 2019 and ensure fair competition between financial service providers such as banks on the one hand and tech companies like Apple on the other. Since this first attempt did not have the desired success, the grand coalition tightened the regulations in the summer of 2021.

The law “made a contribution to improving access to technical infrastructure,” writes the Ministry of Finance in its assessment. The BMF therefore proposes “currently not to make any legal changes to the ZAG”.

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The new traffic light coalition wants to stick to the law. “The regulation has created a basis for more competition in payment transactions, which has also triggered groundbreaking developments in the EU and which we welcome,” says Markus Herbrand, spokesman for financial policy for the FDP.

It is crucial that this market segment is designed fairly for everyone involved. “At the same time, the development is peppered with complex technical questions that reach to the heart of business models and must be observed very closely during the upcoming consultations.”

Pay by mobile

While Google opened up the interface for its payment service, Apple didn’t want it that way. The legislature has therefore reacted.

(Photo: dpa)

Apple Pay was launched in the USA in 2014 and has also been available in Germany since the end of 2018. The data transfer at the checkout terminals runs via NFC technology. Apple Pay is currently the only NFC-based payment service that works on iPhones and other Apple devices.

NFC stands for Near Field Communication and is also referred to as contactless data transmission. Apple Pay is now supported by the majority of German financial institutions, but they had to negotiate with Apple beforehand.

However, it is unclear to what extent the tightening of the law has meant that payment service providers such as banks can use the interface better. There are no concrete figures in the BMF report.

The Federal Association of Volksbanken and Raiffeisenbanken (BVR), which welcomed the tightening of the law, states: “We do not know who has submitted applications to system companies.” , which also transcends national borders”.

The BMF names another advantage: the negotiating position between payment service providers and system groups such as Apple has improved as a result of the law. “Negotiations with system companies should therefore be conducted under different framework conditions,” says the report.

Apple declined to comment on the BMF report, but stressed that it stands by its earlier criticism. The group sees the release of the interface as a security risk and endangers data protection as a result.

The Ministry of Finance, on the other hand, considers the ZAG to be a role model in the EU. Brussels is currently working on new rules for digital markets, the so-called Digital Markets Act (DMA). “ZAG was probably one of several triggers that led the EU Commission to submit the proposal for a corresponding access claim within the framework of the DMA in December 2020,” writes the Ministry of Finance. “The standard has thus made a contribution to improving fair market conditions and (digital) competition at European level.”

The Volksbanken and Raiffeisenbanken take a similar view and welcome the efforts of the EU: “In order to ensure a fair and transparent internal market, the ZAG also needs corresponding regulations for the European Union.”

More: Finance Committee wants to curtail the power of Apple Pay in the second attempt

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