Tech giants play a substantial role in mobile wallets innovation and competition

Mobile wallets - Apple and Google logos

Apple and Google were considerable players in establishing tap-to-pay regulations and technology.

A new Consumer Financial Protection Bureau (CFPB) report has placed the spotlight on the way mobile wallets are impacted by the policies and practices of tech giants.

This is particularly true when it comes to the way that smartphones and wearables are used to transact.

For instance, Apple currently has a ban on bank and payment apps from being able to access the Apple iOS device tap-to-pay functionality, setting fees for mobile wallets through Apple Pay. On the other hand, the Android operating system from Google doesn’t have a similar policy in place.

Mobile wallets - Phone used at POS terminal

The CFPB report focuses on explaining the way the regulations put into place by such tech giants can have a massive impact on the shape of device-based payments, including everything from the choices available to consumers to innovation and the growth of decentralized, open banking and transactions in the United States.

The regulations big tech firms put into place have a direct relationship with mobile wallets and their use.

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

By this year’s second quarter, the iOS operating system was installed on over half (55 percent) of US smartphones. The remaining 45 percent of phones had the Android operating system. This makes it quite easy for Apple and Google to have the largest impact on smartphone-based transactions through the regulations they set to govern app developers and the integration of near field communication (NFC) technology into their offerings. NFC is required to make it possible to use tap-to-pay and contactless payment options.

As mobile wallets become increasingly popular worldwide, the control the two tech giants have over the shape of their development and use cannot be ignored, underscoring the importance of their policies on retail as a whole, both online and in person, not to mention on the direction more conventional transaction methods are taking moving forward.

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