Mandatory Payment Systems and Anti-Steering Restrictions

1. Introduction

Mandatory payment systems and anti-steering restrictions are increasingly important competition-law issues in digital markets, particularly where a dominant platform controls the technical or commercial infrastructure through which transactions are completed.

A mandatory payment system exists where a platform requires merchants, developers, or other commercial users to process payments through a designated payment system—often the platform's own payment service or an approved intermediary. An anti-steering restriction prevents those users from telling consumers about alternative payment methods, directing them to an external website, offering lower prices elsewhere, or otherwise steering transactions away from the platform's payment infrastructure.

The competition concern is not merely the level of payment fees. The combination of mandatory payment routing + contractual restrictions on steering + control over access to consumers can substantially reduce competitive pressure on payment providers and make the platform's payment system effectively unavoidable.

The issue can therefore be analysed under:

• abuse of dominance;
• exclusionary vertical restraints;
• tying and leveraging;
• refusal of access;
• self-preferencing;
• excessive or unfair payment commissions;
• restrictions on consumer choice;
• interoperability and access obligations;
• digital-platform regulation; and
• merger remedies involving payment infrastructure.

The central competition-law question is:

Can a dominant digital platform require transactions to use its payment system while simultaneously preventing merchants from informing consumers about cheaper or competing payment methods?

Generally, the stronger the platform's market power, the less defensible such restrictions become.

2. Meaning of Mandatory Payment Systems

A mandatory payment system may take several forms.

A. Exclusive payment processing

A platform may require all transactions occurring through its ecosystem to use its designated payment processor.

B. In-app payment requirement

An app store may require developers selling digital goods or services to use the platform's in-app payment system.

C. Commission-linked payment routing

The platform may permit alternative payment systems technically but impose commercial conditions that make their use economically impractical.

D. Default payment architecture

The platform may make its own payment mechanism the technical default while preventing competing payment services from obtaining equivalent functionality.

E. Anti-circumvention arrangements

The platform may prohibit merchants from completing transactions outside the platform after consumers have been acquired through the platform.

These mechanisms become especially significant where the platform controls a gateway market.

3. Meaning of Anti-Steering Restrictions

An anti-steering restriction prevents a business from communicating with customers about alternative purchasing channels.

For example, a platform could prohibit a developer from saying:

"You can purchase this subscription directly from our website at a lower price."

The restriction may also prohibit:

• hyperlinks to external payment pages;
• references to alternative payment providers;
• displaying different prices outside the platform;
• offering discounts for external purchases;
• emails directing customers to an external website;
• QR codes leading to alternative payment systems; or
• informing customers that the platform's commission increases the price.

The crucial competition concern is that consumers cannot make an informed comparison.

4. Why Mandatory Payment Systems Raise Competition Concerns

A. Foreclosure of competing payment providers

If a dominant platform requires all transactions to pass through its payment system, competing payment providers may lose access to a substantial customer base.

This can produce:

Platform dominance → mandatory routing → reduced rival access → reduced scale → weaker competition.

B. Elimination of price competition

Payment processors normally compete through:

• transaction fees;
• fraud prevention;
• settlement speed;
• authentication;
• security;
• merchant services; and
• technological innovation.

A mandatory system can substantially reduce that competitive process.

C. Artificial increase in switching costs

Consumers and merchants may technically have alternatives, but those alternatives become difficult to use.

This creates a distinction between:

legal availability of an alternative

and

commercially meaningful availability of an alternative.

Competition law is concerned with the latter.

5. Why Anti-Steering Restrictions Are Particularly Serious

An anti-steering rule can prevent the market from correcting the platform's market power.

Suppose:

• Platform payment fee = 30%;
• external payment fee = 5%;
• merchant wants to tell consumers about the external option.

If the platform prohibits the merchant from communicating the alternative, consumers may never learn about the cheaper option.

The platform therefore controls both:

1. the transaction infrastructure, and
2. the information available to consumers about competing infrastructure.

This creates a particularly powerful form of market control.

6. Mandatory Payment Systems as Tying

The arrangement may resemble tying.

The platform's primary product may be:

access to the platform or app store.

The tied product may be:

the platform's payment service.

The competition-law theory becomes:

"You cannot access the platform's commercial ecosystem unless you purchase or use our payment service."

The stronger the platform's dominance in the tying market, the greater the potential concern.

7. Mandatory Payment Systems as Leveraging

A dominant platform may use power in one market to extend its position into another.

For example:

App-store dominance → payment-system dominance

or

marketplace dominance → payment-processing dominance.

The platform's control of customer access becomes the source of power in the payment market.

This is a classic form of leveraging.

8. Anti-Steering as a Vertical Restraint

Anti-steering restrictions can also be treated as vertical restraints because they regulate the relationship between:

• platform and merchant;
• app store and developer;
• marketplace and seller; or
• payment platform and business user.

The restriction becomes particularly problematic when it prevents merchants from independently determining:

• price;
• payment method;
• distribution channel; or
• customer relationship.

9. Consumer-Welfare Dimension

Anti-steering restrictions can harm consumers by:

• preventing price comparisons;
• increasing transaction prices;
• reducing payment-method choice;
• limiting discounts;
• suppressing innovative payment services;
• reducing transparency; and
• increasing dependence on a single platform.

Thus, the harm may exist even when the platform does not directly increase its payment commission.

10. Key Case Laws

1. Apple App Store – Epic Games v Apple

Epic Games, Inc. v Apple Inc.

This is one of the most important modern cases concerning mandatory in-app payment systems and anti-steering.

Apple required developers to use its in-app purchasing mechanism for certain digital transactions and restricted developers from informing users about alternative purchasing arrangements.

The court's treatment of Apple's anti-steering provision was particularly significant.

Legal significance

The case demonstrated that:

• payment restrictions can have competition consequences;
• anti-steering rules deserve independent scrutiny;
• a platform may possess substantial ecosystem power without every restriction automatically constituting monopolization;
• consumer communication can itself be competitively significant.

The case is particularly useful for analysing the relationship between payment commissions, platform control and consumer information.

11. European Commission – Apple App Store Practices

The European Commission's Apple App Store investigations provide another important competition-law reference.

The Commission examined Apple's restrictions preventing developers from informing users about alternative purchasing possibilities outside Apple's ecosystem.

Competition issue

The concern was that Apple could:

1. control access to consumers;
2. require developers to use Apple's payment infrastructure; and
3. prevent developers from steering consumers toward alternative purchasing channels.

Importance

The case illustrates a fundamental principle:

A platform can potentially reinforce payment-system power by controlling the communication channel through which consumers learn about alternatives.

This makes anti-steering restrictions potentially more significant than an ordinary contractual restriction.

12. European Commission – Google Shopping

Google Search (Shopping)

The Google Shopping decision concerned Google's preferential treatment of its own comparison-shopping service rather than payment processing directly.

Nevertheless, it is highly relevant by analogy.

The Commission and EU courts examined how a dominant platform could use control over an important digital gateway to disadvantage competing services.

Relevance to payment systems

The principle can be extended to payment infrastructure:

gateway dominance + discriminatory treatment = potential competitive foreclosure.

A platform that controls access to users may similarly disadvantage competing payment systems through technical or contractual restrictions.

13. European Commission – Google Android

Google Android

The Google Android proceedings concerned Google's use of contractual arrangements and its position in mobile operating systems to reinforce related market power.

The case involved issues surrounding:

• tying;
• contractual restrictions;
• default arrangements;
• distribution;
• competing search services.

Relevance

The case demonstrates how dominance in one technological layer can be used to reinforce power in adjacent markets.

The same analytical framework can apply where:

mobile ecosystem power → mandatory payment architecture → payment-market foreclosure.

14. Microsoft v Commission

Microsoft Corp. v Commission

The Microsoft case concerned interoperability and the use of dominant-market power to disadvantage competing products.

The EU courts accepted that contractual and technological restrictions imposed by a dominant firm can have exclusionary consequences where they impair effective competition.

Relevance to payment systems

A dominant platform that prevents competing payment providers from obtaining effective access to users can raise analogous concerns.

The central question is whether the restriction:

• protects legitimate platform functionality, or
• unnecessarily excludes competing providers.

15. Bronner v Mediaprint

Oscar Bronner GmbH & Co. KG v Mediaprint

This leading EU case concerned access to an essential distribution infrastructure.

The Court of Justice established stringent conditions for requiring a dominant undertaking to provide access to infrastructure.

Relevance

Mandatory-payment disputes can raise a similar question:

Is access to the platform's payment or transaction infrastructure indispensable for effective competition?

However, Bronner also demonstrates that competition law should not automatically transform every private infrastructure into a mandatory-access facility.

The indispensability requirement remains important.

16. IMS Health v Commission

IMS Health GmbH & Co. OHG v NDC Health

The IMS Health litigation concerned access to a commercially important information structure and the exceptional circumstances under which refusal to license/access intellectual property could constitute abuse.

Relevance

The case is important where a payment platform claims that its:

• technology;
• authentication system;
• payment architecture; or
• proprietary infrastructure

should remain under exclusive control.

It demonstrates that compulsory access requires careful balancing between:

innovation incentives

and

preservation of effective competition.

17. MEO v Autoridade da Concorrência

MEO v Autoridade da Concorrência

This case concerned differential pricing and discrimination under Article 102 TFEU.

The Court emphasized the importance of assessing whether differential treatment places trading partners at a competitive disadvantage rather than assuming that every difference in price or conditions automatically constitutes abusive discrimination.

Relevance

For payment systems, the principle matters where a platform:

• charges different payment commissions;
• gives preferential treatment to its own payment service;
• imposes discriminatory access terms; or
• provides competing payment systems with inferior functionality.

The competitive effects must be examined rather than relying solely on the existence of differential treatment.

18. Summary of the Case-Law Principles

19. Legal Test for Mandatory Payment Systems

A competition authority should generally examine:

Step 1 — Dominance

Does the platform possess substantial market power?

Relevant factors include:

• market share;
• network effects;
• ecosystem control;
• switching costs;
• data advantages;
• developer dependence;
• consumer lock-in; and
• barriers to entry.

Step 2 — Payment-system relationship

Is the payment system:

• technically mandatory;
• contractually mandatory;
• economically unavoidable; or
• effectively mandatory despite nominal alternatives?

Step 3 — Steering restriction

Can merchants/developers:

• communicate alternative payment options?
• link to external purchasing channels?
• offer external discounts?
• provide alternative payment methods?

Step 4 — Foreclosure

Does the restriction substantially reduce competing payment providers' access to users?

Step 5 — Consumer harm

Does the arrangement result in:

• higher prices;
• reduced choice;
• reduced innovation;
• reduced quality;
• reduced transparency; or
• reduced payment competition?

Step 6 — Objective justification

Can the platform demonstrate legitimate reasons such as:

• cybersecurity;
• fraud prevention;
• consumer protection;
• transaction integrity;
• privacy;
• authentication; or
• technical compatibility?

Step 7 — Proportionality

Even where a legitimate objective exists:

Is a less restrictive mechanism available?

This is often the decisive question.

20. Anti-Steering and the Transparency Problem

Anti-steering rules can create an unusual competition problem.

Ordinarily, competition depends on consumers being able to compare alternatives.

But an anti-steering restriction can suppress the information required for comparison.

Thus:

No information → no comparison → no switching → no competitive pressure.

This means that an apparently "consumer-protective" platform rule may actually prevent consumers from exercising competitive choice.

21. Relationship with Data and Digital Ecosystems

Payment systems also generate commercially valuable information.

A dominant platform may obtain:

• transaction data;
• purchasing history;
• merchant information;
• consumer preferences;
• conversion rates;
• payment-failure information; and
• behavioural information.

If competing payment providers are excluded, the platform can potentially obtain a data advantage in addition to a payment advantage.

This creates a feedback loop:

Payment dominance → transaction data → better ecosystem intelligence → stronger platform → greater payment dominance.

Competition authorities may therefore need to consider both financial foreclosure and data foreclosure.

22. Potential Remedies

Competition authorities can impose several remedies.

A. Ban on anti-steering

Platforms may be prohibited from preventing merchants from informing consumers about alternatives.

B. External-link obligation

Developers may be permitted to link directly to alternative purchasing channels.

C. Choice screens

Consumers may be offered a genuine choice among payment systems.

D. Interoperability

Competing payment providers may be granted technical access.

E. Non-discrimination

The dominant platform may be prohibited from giving its payment service preferential treatment.

F. Transparent commissions

Payment fees may have to be disclosed clearly.

G. Separation remedies

In particularly severe cases, payment operations may be separated from the platform's marketplace function.

H. Monitoring trustee

A regulator may appoint an independent monitor to ensure continuing compliance.

23. Economic Effects

The competitive effects can be represented as:

Mandatory payment

↓

Merchant cannot freely choose processor

↓

Rival payment providers lose transaction volume

↓

Rivals achieve less scale

↓

Payment competition weakens

↓

Platform can maintain higher commissions

↓

Merchants increase prices or absorb costs

↓

Consumers ultimately bear part of the cost

Anti-steering can intensify every stage because merchants cannot easily inform consumers of alternatives.

24. Important Distinction: Legitimate Payment Integration vs Anticompetitive Restriction

Not every mandatory payment arrangement violates competition law.

A platform may legitimately require a particular payment architecture where it is genuinely necessary for:

• security;
• fraud prevention;
• technical integrity;
• refunds;
• parental controls;
• identity verification;
• regulatory compliance; or
• consumer protection.

The critical distinction is between:

necessary technical integration

and

commercial foreclosure disguised as technical necessity.

A platform should not be permitted to invoke security as a blanket justification for restrictions that primarily protect its payment revenues.

25. Mandatory Payment Systems and Digital-Market Regulation

Modern digital-market regulation increasingly moves beyond traditional abuse-of-dominance litigation.

Ex ante regulation can impose obligations such as:

• permitting alternative payment systems;
• allowing steering;
• interoperability;
• fair access;
• non-discrimination;
• transparency; and
• prohibition of self-preferencing.

This is significant because traditional antitrust proceedings may take years, while platform payment restrictions can rapidly become entrenched through network effects.

26. Critical Legal Issues

The most difficult legal questions include:

1. Is the payment system a separate market?

If yes, mandatory routing may constitute leveraging or tying.

2. Is the platform indispensable?

This affects compulsory-access analysis.

3. Is anti-steering independently harmful?

It may be, particularly where it prevents consumers from discovering alternatives.

4. Is consumer choice sufficient?

Formal availability of alternatives may be meaningless if consumers cannot be informed about them.

5. Can security justify exclusivity?

Only where the restriction is genuinely necessary and proportionate.

6. Should payment commissions be regulated?

Competition law generally prefers competition to price regulation, but structural foreclosure may justify regulatory intervention.

7. Should interoperability be mandatory?

This depends on indispensability, proportionality, technical feasibility, and the effect on innovation.

27. Conclusion

Mandatory payment systems combined with anti-steering restrictions represent a particularly powerful form of digital-platform control. A dominant platform can potentially control both the transaction infrastructure and the information through which consumers discover competing transaction channels.

The strongest competition concerns arise where the platform:

1. controls an important gateway;
2. requires use of its own payment system;
3. charges substantial commissions;
4. prevents competing payment providers from accessing users;
5. prohibits merchants from steering consumers elsewhere; and
6. uses technical or contractual restrictions to make alternatives commercially ineffective.

The case law—from Epic Games v Apple, the European Commission's Apple proceedings, Google Shopping, Google Android, Microsoft, Bronner, IMS Health, and MEO—shows that competition analysis must distinguish legitimate platform integration from strategies that use gateway power to suppress adjacent-market competition.

The fundamental principle is therefore:

A dominant platform should not be able to create artificial payment-system indispensability by simultaneously controlling access to consumers, mandating its payment infrastructure, and preventing consumers from learning about competing alternatives.

Such arrangements are especially significant in digital markets because payment control, platform control, data accumulation, and consumer lock-in can reinforce one another, potentially converting a payment rule into a broader mechanism of ecosystem dominance.