Take 2: Modifications to German laws that permit entry to the iPhone’s NFC antenna

Germany will change its legislation on access to technical infrastructure by payment service providers in spring 2022.


The popularity of paying by mobile phone is growing steadily. Most of these payment methods rely on the phone’s Near Field Communication (NFC) antenna (or chip) to transfer data between the phone and the merchant’s contactless terminal.

Most cell phone manufacturers leave the NFC interface “open” for Payment Service Providers (PSPs). Payment service providers can therefore add payment functions to their banking apps via NFC. Apple is said to have “closed” the interface to PSPs. Payment service providers are therefore obliged to use Apple’s e-wallet service “Apple Pay” – and to pay a fee for it.

Lex Apple Pay

To change this, the German legislator passed a law in January 2020 as part of the Payment Services Supervision Act (ZAG) that enforces access to NFC antennas (or interfaces in general). Because the law primarily affects Apple, it became commonly known as Lex Apple Pay. See our customer alert from February 2020 here.

The law stipulates that so-called system companies must grant payment service providers access to technical infrastructure (such as the NFC antenna) that enables them to offer payment and e-money services. In return, system companies are allowed to demand an “appropriate fee” for providing access to the infrastructure.

In the event of justified and proven security concerns, system companies may refuse the aforementioned access. Even if a system company has fewer than 2 million registered users or if its infrastructure is used by ten or fewer PSPs, it is not subject to the obligation.

What happened after the law was passed

One of the primary purposes of this law was to allow PSPs to access Apple’s NFC interface. German banks, especially German savings banks, campaigned for this law because they did not want to rely on Apple Pay. So far, however, it has been assumed that no German bank has made use of the newly created options.

It is widely believed that Apple’s “reasonable fee” for access to technical infrastructure is similar to the fee for using Apple Pay, leading PSPs to choose Apple Pay rather than using a different wallet . The term “reasonable fee” is rather vague and leaves a lot of uncertainty among payment service providers. There is currently no case law that gives an indication of what fee is “reasonable”. However, this does not necessarily mean that the law has no effect at all. Some have argued that this law has made Apple’s pricing policy more flexible.

It was believed that other EU countries could enact similar laws, but to date individual countries have not enacted similar laws. However, the European Commission opened a formal antitrust investigation in June 2020 and was considering regulating how phone manufacturers grant access to payment service providers. This could lead to EU-wide legislation encouraging payment service providers to consider the possibility of using or creating an e-wallet without reference to Apple Pay.

Changes to Lex Apple Pay

Changes to this German law will come into force from March 2022.

According to the Amendment Act, system companies are no longer allowed to demand an “appropriate fee” for providing access to the infrastructure. Instead, the system company may only charge a fee that does not exceed the actual costs of the respective access. The “actual cost”, while providing more clarity than the “reasonable fee”, is still a matter of interpretation. The legislative discussions provide more details than the law provides. It was not the intention of the legislature to create an uneconomical access right for the system company. The official justification of the law by the Finance Committee of the German Bundestag (Drs. 19/30443, p. 79) states that the system companies also – to an appropriate extent; Development costs associated with the addition are included in the actual costs.

In addition, the accessibility of the infrastructure will increase: If system companies only had to grant appropriate access conditions before the switch, they are now obliged to use all end devices (not just smartphones, but also smartwatches or smart speakers). Functional equality must be guaranteed; this means that hardware components and authentication methods (such as face recognition, fingerprint sensors, iris scanners) must also be included.

In cases where system companies refuse access to the infrastructure, the payment service providers can review the refusal by an expert who can request the information necessary for the review. The system company should provide the expert with the information required for this test immediately upon request. The expert is obliged to maintain secrecy with regard to the information provided and does not pass it on to the payment service provider or to third parties.

Effects and What’s Next?

There are still a few months left before the changes take effect. It remains to be seen whether Lex Apple Pay 2 will have the desired effect in motivating PSPs to create services competing with Apple Pay, or whether the impact will be as minor as we have seen for Lex Apple Pay 1. In any case, it will be interesting to see the next steps taken by the other EU countries and the result of the European Commission’s formal antitrust investigation.

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