Apple has revealed that other developers will be able to offer near-field communication (NFC) transactions within their apps after years of exclusivity.
Following the launch of iOS 18.1, developers will be able to offer NFC contactless transactions using the Secure Element from within their apps on iPhone, separate from Apple Pay and Apple Wallet.
This development will open up a plethora of opportunities and is set to revolutionise digital identification. Developers will be able to offer in-app contactless transactions for in-store payments, car keys, closed-loop transit, corporate badges, student IDs, home keys, hotel keys, merchant loyalty and rewards cards, and event tickets, with government IDs to be supported in the future.
Previously, when making a contactless payment IOS users were only able to use Apple Pay. However, after this update users of Apple will be able to set a default contactless payment app of their choice.
To begin with, the relevant APIs to build these apps will be available to developers in Australia, Brazil, Canada, Japan, New Zealand, the UK and the US. Developers will also have to enter into a commercial agreement with Apple, request the NFC and SE entitlement, and pay the associated fees.
Although this is a monumental change in the payments and fintech sectors, it isn’t surprising. In July, Apple’s commitment to allow wider industry access to its iPhone contactless payments technology was made binding under European Union (EU) antitrust legislation.
At the time of the ruling, the European Commission (EC) said: “The Commission’s preliminary view is that Apple’s refusal excluded Apple Pay’s rivals from the market and led to less innovation and choice for iPhone mobile wallets users.
“Such behaviour may breach Article 102 of the Treaty on the Functioning of the European Union (‘TFEU’), which prohibits the abuse of a dominant position.”
The EC’s decision was welcomed by a lot of other tech firms, which for the last few years have conceptualised the opportunities this announcement would create.
Some of these ideas were discussed earlier this year at Money20/20 Europe. During a panel on digital wallets, Kristina Yasuda, Identity Systems Architect at SPRIND, expressed her worries about Apple’s dominance.
She said: “We need to make sure any third-party wallet can take advantage of the infrastructure at the same level of grace. So we don’t end up in a situation where people can only use half of their credentials, and there’s no choice.”
Around this space, conversations have often split in two between the public and the private sector, which will only be encouraged by Apple announcing that government IDs will be available in the future.
Recently, the Digital Identity Regulation entered into force in May 2024, which is designed to address the challenges of digital identification within the EU. Under this regulation, every EU Member State is required to offer at least one EU Digital Identity Wallet to all citizens and residents by 2026.
The UK has also made announcements around Digital IDs this year. The Labour Party revealed during the King’s Speech that it was reviving Digital ID plans under the Digital Information and Smart Data Bill, aiming to establish digital identity products, enabling people to quickly and securely verify their identity when using online services.
It is yet to be seen how Apple’s update will help innovations in the fintech and payments space, but there is no doubt that rising neobanks will be among those now looking to compete with Apple.