CFPB
Insights North America Paytech

CFPB Report Examines Big Tech’s Influence on Mobile Payments

The Consumer Financial Protection Bureau (CFPB) has released a report shedding light on the significant role that Big Tech companies, namely Apple and Google, play in regulating ‘tap-to-pay’ functionality on mobile devices such as smartphones and smartwatches.

Currently, Apple prohibits banks and payment apps from accessing tap-to-pay features on its iOS devices, while Google’s Android operating system lacks such restrictions. The report highlights how these regulations set by mobile operating systems can profoundly impact innovation, consumer choices, and the growth of open and decentralised banking and payments in the US.

As of the second quarter of 2023, Apple’s iOS operated on 55 per cent of smartphones shipped in the US, with Google’s Android on 45 per cent. These two tech giants dictate the rules for app developers’ integration of near field communication (NFC) technology, crucial for tap-to-pay transactions. Given their dominant market share as well as the increasing prevalence of mobile payments, their policies have a substantial influence on retail payments.

CFPB Director Rohit Chopra stated: “Regulations imposed by Big Tech firms have a big impact on whether consumers and businesses can make payments using third-party apps. We are carefully evaluating Big Tech’s role in our banking and payments system.”

Key findings from the report
  • Rapid growth of tap-to-pay usage: Tap-to-pay options in the US have seen substantial growth, approaching an estimated $300billion across platforms like Apple Pay, Samsung Pay and Google Pay. Some analysts predict a 150 per cent growth in digital wallet tap-to-pay transactions by 2028.In 2021, there were approximately 25 million Google Pay users and 16.3 million Samsung Pay users. An estimated 130 million Americans use an iPhone monthly, with three-fourths of them also activating Apple Pay. In April 2023, around 55.8 million people made in-store payments using Apple Pay, accounting for nearly half of iOS users.
  • Differing regulations by dominant mobile operating systems: Apple’s iOS devices do not allow third-party payment apps access to NFC technology, limiting tap-to-pay options to Apple Pay. In contrast, Google’s Android system presently does not impose such restrictions, although this policy may change in the future.
  • Potential impact on consumer choice and innovation: Restrictive tap-to-pay practices can curtail consumer choices and hinder progress toward a more robust open banking ecosystem, where consumers have greater control over their financial information. For example, Apple’s NFC policy currently prevents direct integration of tap-to-pay features into existing banking and payment apps.

The report is part of the CFPB’s broader effort to monitor the transition to open banking in the US, including trends in consumer payments and the introduction of multi-service super apps.

The CFPB is currently engaged in rulemaking to clarify consumers’ rights to personal financial data under Section 1033 of the Consumer Financial Protection Act. This initiative has the potential to accelerate the shift toward ‘open banking’ in the US, fostering greater consumer choice and ease of switching between financial service providers.

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