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Closure of the investigation into payment apps confirms need for new rules

The Netherlands Authority for Consumers and Markets (ACM) will close its investigation into payment apps’ access to NFC technology installed in devices such as smartphones. NFC technology offers the ability to make contactless payments using smartphones in brick-and-mortar stores. The investigation confirms the previously identified anticompetitive concerns on the Dutch market for payment apps. However, the Interchange Fee Regulation (IFR), the European rules on the basis of which ACM conducted this investigation, is not suitable for alleviating these anticompetitive concerns in the Netherlands. That is why ACM is in favor of additional European rules.

What was this case about?

ACM’s investigation has revealed that access to NFC technology (Near Field Communication) is an important prerequisite for market participants to invest in the development of payment apps of their own. This is because consumers are already able to pay in brick-and-mortar stores using this technology: it is already installed in payment cards. Since market participants such as banks are not given access to this technology on smartphones, they have not started developing or even stopped developing payments apps of their own. As a result thereof, consumers and retailers have fewer methods of payment to choose from.

ACM examined whether the IFR offered sufficient options to tackle this problem by mandating access to NFC technology on smartphones. This turned out not to be the case. The IFR can only be used if there is a choice between different payment apps. That choice currently does not exist in the Netherlands. In other countries, where competitor payment apps do exist, the IFR may be applied.

Martijn Snoep, Chairman of the Board of ACM, adds: ‘This investigation confirms that access to NFC technology is crucial for the development of payments apps from which consumers and retailers are able to choose. These European rules do not give us the tools to mandate such access in the Netherlands. That is only possible if a competitor payment app already exists, but, apparently, that requires access to NFC technology. So this is a classic catch-22 situation. That is why we would welcome amendments to the European rules.’

What are the next steps?

ACM is in favor of amending the European rules for payments services (PSD2) and of introducing the Digital Markets Act. That will mandate ‘technical service providers’ such as smartphone manufacturers to offer access to crucial technology and infrastructure such as NFC technology. Amending existing rules and introducing new rules will create a level playing field for payment-app providers.

In addition, the European Commission is conducting an investigation of its own into this problem. Theirs is conducted on the basis of competition rules however.

ACM, competition, and innovation in the digital economy

ACM gives extra attention to the costs and benefits of the digital economy. Innovation must not be stifled, and consumers must be able to make their own choices and be able to purchase products and services with confidence. In that context, for example, ACM is also conducting a market study into cloud services. In addition, ACM has taken steps in preventing online misleading practices. Through enforcement actions, market studies, and education, ACM aims to keep the benefits of innovation in the digital economy, and to ensure that markets work well for people and businesses, now and in the future.

See also:

4-12-2020 ACM launches an investigation into users’ freedom of choice regarding payment apps on smartphones
1-12-2020 Big Tech and the Dutch payment market: tightening of rules needed to maintain a level playing field 
The EU Digital Services Act package