The US government’s top consumer watchdog, which is in the process of writing rules around the sharing of consumer financial data, warned tech giants about being overly restrictive in access to payments apps, taking a shot at Apple Inc’s proprietary tap-to-pay technology.
According to the Consumer Financial Protection Bureau, the dominance of Apple and Alphabet Inc’s Google Pay in the mobile-device tap-to-pay market has imposed constraints on app developers’ ability to use this technology, potentially limiting consumer choice.
While Apple requires iOS device users to use Apple Pay for tap-to-pay transactions, preventing direct integration with apps like Venmo, Google’s Android operating system does not have this requirement. However, the bureau expressed concerns that Google may change its position in the future.
In a report published on Thursday, the agency stated, “The CFPB will continue to work with these entities and take appropriate steps to ensure that Big Tech companies do not impede the development of open ecosystems for digital payments.”
The popularity of tap-to-pay transactions has soared as mobile devices have become ubiquitous, making smartphone payments increasingly desirable. In April 2023 alone, the CFPB estimated that almost 56 million consumers used Apple Pay for in-store payments.
In the upcoming months, the bureau plans to release regulations on open banking, which would dictate how financial firms share consumer data. Rohit Chopra, the agency’s director, emphasized that large technology companies like Apple and Google have a significant impact on whether consumers can use third-party apps for payments.
“We are carefully evaluating Big Tech’s role in our banking and payments system,” Chopra said in a statement accompanying the report. The CFPB’s request for information on payments systems from big tech companies almost two years ago foreshadowed further actions by the bureau.
Neither Alphabet nor Apple provided comments in response to the report.
The CFPB stated in its report, “Any frictions either company imposes on access to essential hardware or software could impede the shift towards open banking and, ultimately, negatively impact consumers – e.g., by reducing competition, innovation, choice, and ease of access.”
Apple is also under fresh scrutiny from the European Union regarding antitrust concerns. The EU’s competition investigators have sent a series of questions to retailers as part of an ongoing probe into Apple’s closely guarded payments chip. This follows formal antitrust charges against Apple by the EU a year ago, which alleged that Apple’s actions restricted competition in the mobile wallets market on iOS devices.
Earlier this year, Apple announced plans to allow merchants to accept payments through Apple Pay, credit cards, and digital wallets without additional hardware, as an alternative to Square technology provided by Block Inc. However, users of iOS devices are still limited to using Apple Pay for tap-to-pay transactions.
– Bloomberg
Credit: The Star : News Feed
