Apple Gets Warning From Top US Consumer Watchdog on Tap to Pay

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.

Because Apple and Alphabet Inc.’s Google Pay dominate the mobile-device tap-to-pay market, the constraints they impose on app developers’ ability to use the technology could inhibit consumer choice, the Consumer Financial Protection Bureau said. Apple requires iOS device users to turn to Apple Pay for tap-to-pay transactions, barring direct integration with apps such as Venmo, while Google’s Android operating system does not, but the concern is that Google “could reverse this position in the future,” the bureau said.

“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 agency said in a report published Thursday.

Tap-to-pay transactions have exploded in recent years as mobile devices became ever-present, making paying via a smartphone more and more desirable. Almost 56 million consumers used Apple Pay for an in-store payment in April 2023 alone, the CFPB estimated.

In coming months, the bureau is preparing to release regulations on open banking, which would essentially dictate how financial firms share consumer data. Large technology companies such as Apple and Google impact whether consumers can make payments using third-party apps, said Rohit Chopra, the agency’s director.

“We are carefully evaluating Big Tech’s role in our banking and payments system,” Chopra said in a statement announcing the report. Almost two years ago, the CFPB told big tech companies to turn over information on their payments systems, foreshadowing further actions by the bureau.

Read More: How ‘Open Banking’ Unlocks More Consumer Finance Apps: QuickTake

Representatives for Apple and Alphabet didn’t immediately respond to requests for comment Thursday.

“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,” the CFPB said in its report.

Apple is also facing a fresh round of European Union antitrust scrutiny after the bloc’s competition investigators dispatched a series of questions to retailers as part of an ongoing probe into the iPhone maker’s closely guarded payments chip. The move, confirmed by a European Commission spokesperson in May, comes on the heels of formal EU antitrust charges against Apple a year earlier, which claimed that its actions restricted competition in the market for mobile wallets on iOS devices.

Earlier this year, Apple confirmed plans to let merchants accept payments through Apple Pay, credit cards and digital wallets without additional hardware, giving them an alternative to Block Inc.’s Square technology. Consumers using iOS devices are still restricted to Apple Pay when tapping to pay.