Apple Pay: The Rise and Fall of an In-App Monopoly
and how payments companies can help merchants succeed.
If there is one thing that is undeniable, it is that Apple knows how to make great products. The reason most of their products are great is that it is the perfect blend between hardware and UX.
The same goes for Apple’s built-in checkout, which comes with every phone it ships. But underneath that, they also build the 21st century version of a tollbooth that siphones 30 percent of every digital dollar flowing through iOS.
For years, those who were developing iOS didn’t complain, as it allowed them to build digital companies that never existed. But now that a federal US judge has pried the gate open, billions in fees are up for grabs.
In this edition of the Payments Strategy Breakdown, I will break down the story of how Apple Pay became the industry’s most impactful wallet and how the 2025 Anti-Steering Ruling changes everything.
Let me explain…
Where did it all begin?
Apple Inc. launched Apple Pay in October 2014 alongside the iPhone 6.
Within a month, one million cards were on file, a faster activation curve than any prior wallet. By 2019, the service had processed over 9 billion cumulative transactions and was accepted at 65 percent of U.S. retailers.
While their growth was already unprecedented, adoption accelerated even more due to the pandemic. Their active users passed 507 million in 2020 and 743 million in 2023, when Apple Pay handled an estimated 20 billion transactions.
Parallel to the point-of-sale push, Apple tightened control of in-app payments.
Since 2011, its App Store rules forced any sale of digital goods, from game coins to music subscriptions, through its own In-App Purchase (IAP) system. The company charged 30 percent on every transaction, a fee nicknamed the “Apple Tax.” By 2024 that commission generated roughly $27 billion on $91 billion of digital-content spend.
Regulators took notice.
South Korea outlawed mandatory IAP in 2021, the Dutch ACM fined Apple €50 million over dating-app payments in 2022, and the EU’s Digital Markets Act designated Apple a gatekeeper in 2023.
The turning point came on 30 April 2025, when Judge Yvonne Gonzalez Rogers ruled that Apple had willfully violated her 2021 anti-steering injunction. The order forbade any fee or friction on external payment links, effectively ending the in-app monopoly in the United States.
What is Apple’s Payments Strategy?
To get a better understanding of what Apple’s Strategy for Apple Pay is, let’s break it down.
Diagnosis.
Apple’s walled-garden strategy extracted supracompetitive (this is when pricing above what can be sustained in a competitive market) rents by bundling distribution (App Store) with payments (IAP). The 30 percent take far exceeded the 2–3 percent norm for card processing.
Guiding policy.
Maintain control of every payment touchpoint, hardware (Secure Element), software (Wallet), and policy (App Store guidelines), while marketing security and privacy as justification.
Coherent actions.
Block third-party access to the NFC chip and tokenization pipeline.
Ban external payment options and even references to them inside apps.
Offer partial concessions only when compelled, 15 percent for small developers, 27 percent on external links, while preserving the core fee model.
With this strategy, Apple was able to have over a decade of dominance, but at the same time, these “gatekeeping” tactics triggered the legal assault, which is now dismantling it.
The Perfect Blend between Hardware and UX
Apple Pay’s secure-element architecture stores a tokenized card number (DPAN) on the device and generates a dynamic cryptogram for each transaction. Only Apple software can access that chip.
The result: a tap-to-pay flow that clears in under 200 milliseconds and never exposes the primary account number. Biometric confirmation via Face ID or Touch ID collapses checkout to a single gesture.
Ease equals adoption.
By 2023, nearly 85 percent of U.S. merchants accepted Apple Pay, and the wallet captured 54 percent of in-store mobile-wallet spending. Most competitors could not even enter the race; without NFC access, they were relegated to QR codes or browser wrappers.
Hardware, software, and policy fused into one self-reinforcing moat.
The 30 Percent ‘Apple Tax’
Digital-content developers had no such hardware escape route.
Guideline 3.1.1 of the App Store Review rules mandated IAP for every game gem, dating-app boost, or streaming subscription sold inside an iOS app. Apple debited the customer’s stored card, remitted 70 percent to the developer, and booked 30 percent as service revenue.
The fee dwarfed underlying payment costs.
On a $10 subscription, interchange and scheme fees total roughly $0.25. Apple collected $3.00.
Between 2019 and 2024, developers paid the company well over $100 billion, money that would otherwise have flowed to growth, lower consumer prices, or payment providers charging market rates.
Why Merchants Started to Push Back
While many companies have been able to build their business using this unique ecosystem, many of them were now becoming unicorns themselves, having to justify any costs that were keeping them from returning profits back to their shareholders.
So, in 2019, Spotify did what nobody had done before and changed the narrative.
Spotify’s 2019 EU complaint said that Apple was both referee and player.
Epic Games moved next, inserting its own checkout into Fortnite in August 2020.
Apple banned the app; Epic sued.
Judge Rogers’ 2021 ruling stopped short of declaring Apple a monopolist but did outlaw anti-steering. However, appeals have delayed relief until 2025.
Meanwhile:
South Korea’s Telecommunications Business Act (2021) forced alternative payments but Apple responded with a still-steep 26 percent fee.
The Netherlands imposed a similar mandate for dating apps; Apple paid weekly fines before grudging compliance.
The EU’s Digital Markets Act required sideloading and external payments by March 2024; Apple’s 27 percent workaround drew immediate regulatory scrutiny.
The U.S. Department of Justice filed a sweeping monopolization suit in March 2024.
Each flashpoint chipped away at either the NFC lockout or the IAP rule. The April 2025 ruling removed the final plank in the U.S.
How The 2025 Anti-Steering Ruling Changes Everything
While it took many years, Judge Rogers found Apple in “willful violation” of her own order.
In her ruling, she barred six practices at once:
No commissions on off-app sales,
No mandatory warning screens,
No design restrictions on purchase links,
No category carve-outs,
No reporting requirements, and
No delays.
Compliance was immediate; the judge even referred Apple for potential criminal contempt.
Apple “strongly disagreed” yet announced it would update App Store policies.
Developers reacted overnight.
Epic confirmed Fortnite’s return to iOS using its own payment rail.
Spotify prepared in-app links to a cheaper web checkout.
Match Group calculated nine-figure annual savings if Tinder shifts just half its purchases off IAP.
Payment providers rushed in with drop-in SDKs that embed a secure browser tab moments after the user taps “Subscribe on our website.”
The Open-Payments Opportunity
App Store digital-goods spend hit $91 billion in 2024.
Under Apple’s fee regime, the company collected $27 billion, almost entirely margin. Replace that with competitive processing at 3 percent, and only $2.7 billion changes hands, leaving $24 billion on the table for developers or consumers.
Stripe, with its developer DNA, could plausibly process 30 percent of that base-case flow, $24 billion, adding $720 million in gross revenue and perhaps $150 million in EBITDA by 2030.
Adyen’s enterprise focus positions it for a 20 percent share, a $480 million revenue bump, and roughly $100 million in incremental profit. PayPal/Braintree and Worldpay split much of the remainder, while specialists like Paddle and Xsolla court verticals.
Card networks stay largely whole; volume merely shifts pipes.
Issuers save Apple Pay wallet fees in markets where Apple charged 0.15 percent, lifting interchange netbacks.
Consumers win via lower prices or new payment options.
How will this impact Payments Strategy
The reason this change is impactful is because it changes Payments Strategy across multiple parties.
Merchants gain direct control of billing relationships, pricing, and churn management, at the cost of handling payments compliance themselves.
Payment service providers face a once-in-a-decade land-grab, where success hinges on instant-on SDKs, in-app UX parity, and subscription tooling.
Investors should model Apple Services revenue with a structurally lower take rate and bet on PSPs with deep mobile capabilities.
Regulators have a working template: the U.S. ruling proves courts can enforce behavioral remedies at scale. Expect copy-and-paste actions in other jurisdictions.
My Key Takeaways
Apple extracted $27 billion in 2024 commissions, nearly 10 times the natural payment economics.
The April 2025 injunction forces zero-fee, friction-free external payments in U.S. apps.
PSPs could capture up to $4 billion in annual revenue by 2030 under a realistic 50 percent migration scenario.
Apple retains a hardware and UX edge, but its pricing power now depends on merit, not mandate.
In Conclusion
Apple spent a decade turning convenience into a cash machine. Courts and regulators just severed the hose. The company will still move trillions through its wallet, but every developer link that opens a browser marks a drip in the moat.
Stripe, Adyen, and their peers smell opportunity; the scramble to rebuild mobile checkout has begun.
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