Northern District of California Judge Jeffrey White partially denied (PDF) Apple Request to Dismiss Proposed Federal Apple Pay Class Action Lawsuit, reports Reuters. Three credit unions argued that Apple violated the Sherman Antitrust Act by charging too much in processing fees and being too exclusionary by not allowing other digital wallets to access its NFC scanning hardware.

The judge agreed with the credit unions’ argument that because QR code payment apps (like Venmo) lack the convenience and functionality of Apple Pay, and it is too expensive to switch to Android, tap to Pay on iOS is a market in itself. And Apple is the only player in a given market that would have other competition if it weren’t for that little detail of the NFC reader that makes it a monopoly, lawyers say.

Lawyers representing the credit unions also claimed that Apple Pay is “illegally linked” to Apple phones, tablets and watches. Judge White also supported Apple’s argument that the claim failed because Apple Pay is free and the company does not force people to use it. But overall, the judge writes that the claim that Apple has a monopoly is “plausible.”

He agreed that the company charges “arbitrary and inflated fees” for payment processing and wrote that the lack of competition in the iOS digital payments market is harmful to consumers. Not allowing NFC access to third-party applications seems anti-competitive to Judge White. The EU deemed Apple Pay anti-competitive in a 2022 draft resolution, also citing Apple’s exclusionary use of the iPhone’s NFC reader.

Apple and the credit unions will meet again in court on December 1 at 11 a.m. PT.