The Consumer Financial Protection Bureau is warning the largest tech companies about enacting restrictive tap-to-pay policies.
The CFPB cited Apple’s proprietary tap-to-pay offering, which bans banks and other third-party payment apps from accessing the option on its iOS devices. The policy could reduce consumer choice and complicate efforts to create a more complete open banking system, according to the agency. Another key player in the tap-to-pay space, Alphabet Inc.’s Google Pay, doesn’t have such a policy but could in the future, the CFPB said.
“Regulations imposed by Big Tech firms have a big impact on whether consumers and businesses can make payments using third-party apps,” said Director Rohit Chopra. “We are carefully evaluating Big Tech’s role in our banking and payments system.”
The report was released as the CFPB plans to finalize its open banking rule next year. Open banking enables consumer-permissioned sharing of financial data with third parties through the use of application programming interfaces.
According to the report, consumers’ usage of tap-to-pay options has neared an estimated $300 billion across Apple Pay, Samsung Pay and Google Pay. As of the second quarter of this year, the iOS operating system was reportedly on a majority of smartphones shipped domestically, while Google Android’s was on 45 percent of smartphones shipped.
“The dominant market share of these two operating systems, coupled with the increasing shift toward mobile device payments, underscores the important role their policies and practices play in retail payments,” the CFPB stated.