Tech giants play substantial role in mobile payments

Mobile payments - POS Terminal paying with phone

A new CFPB report underscores the influence of such players as Apple and Google.

The Consumer Financial Protection Bureau (CFPB) has issued a new report underscoring the impact of tech giants, their policies and practices on mobile payments adoption, use, and trends.

This is particularly true of technology allowing tap-to-pay functionality on smartphones and watches.

The way these companies choose to behave has had a direct impact on access to mobile payments. For instance, Apple currently bans payment apps and banks from being able to access the Apple iOS device tap-to-pay functionality. Moreover, when Apple Pay is used with tap-to-pay, a fee is imposed.

Apple Pay and Google Pay
Credit: Photo by

On the other hand, Google does not have a similar regulation for its Android operating system. As a result, the way near field communication is used for completing transactions is different on devices using that operating system as opposed to that of Apple.

Rules such as these, says the report, are having a direct and substantial impact on consumer choice, innovation, and the growth of an open and decentralized transaction and payment system in the United States.

The regulations these companies apply to mobile payments directly impacts 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 Rohit Chopra, director of the CFPB. “We are carefully evaluating Big Tech’s role in our banking and payments system.”

As of the second quarter of this year, 55 percent of smartphones shipped in the United States were based on iOS. The remaining 45 percent used Android. As a result, the regulations put forward by Apple and Google determine the way essentially the entire market can function when it comes to tap-to-pay. They decide whether app developers are able to access near field communications (NFC) technology for contactless payment transactions. They also decide how retail transactions can take place.

The report concluded that restrictive mobile payments practices with tap-to-pay could harm consumer choice and hold back innovation. It recommended systems in which consumers have more control over their personal financial information and more choice regarding how they use it.

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