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The Consumer Financial Protection Bureau late Thursday released a report raising questions about the part restrictions imposed by big technology firms like Apple Inc. and Alphabet Inc’s Google subsidiary may play in hampering innovation, consumer choice, and the growth of open and decentralized banking and payments in the U.S.
The report, called “Big Tech’s Role in Contactless Payments,” notes that as the United States shifts toward open banking through data portability in consumer finance, any restrictions from the dominant mobile operating systems will have “an outsized effect on access to payments systems and may hinder the development of a truly open ecosystem.”
Apple, for example, forbids banks and payment apps from accessing the tap-to-pay functionality on Apple iOS devices and imposes fees through Apple Pay, while Google’s Android operating system does not currently have such a policy, the CFPB report says. Apple’s policy on access to tap-to pay can reduce consumer choice and inhibit progress toward a more robust open-banking ecosystem, the report says. As a result, consumers may not have as much control over their personal financial information as they would like, while software developers may not be able to provide payments solutions that better meet consumers’ needs, the CFPB contends.
Consumers’ usage of tap-to-pay options in the U.S. is nearing an estimated $300 billion across Apple Pay, Google Pay, and Samsung Pay, and is projected by some payments industry analysts to grow more than 150% by 2028, according to the CFPB’s report.
An estimated 130 million people in the U.S. use an iPhone at least once per month, and three-fourths of them have activated Apple Pay, the report says. An estimated 55.8 million made an in-store payment using Apple Pay in April 2023, accounting for nearly half of iOS users.
The regulator left little doubt its report could foreshadow further action. “Regulations imposed by Big Tech firms have a big impact on whether consumers and businesses can make payments using third-party apps,” CFPB director Rohit Chopra said in a statement. “We are carefully evaluating Big Tech’s role in our banking and payments system.”
