The United States Consumer Financial Protection Bureau (CFPB) has turned a critical eye towards big tech corporations like Apple and Google regarding their role in the mobile payments sector. The CFPB’s chair, Rohit Chopra, expressed at a recent fintech conference concern about these large enterprises working as “mini-governments”. They exert their own rules on payment infrastructure, which may potentially push smaller firms out of the running as big tech continues to innovate.
The rapid growth of consumer payment systems – particularly point-of-sale systems – has not garnered the same regulatory scrutiny as have crypto assets. Big tech companies have subtly entered the payments ecosystem, using it to further engage consumers on their platforms, accumulate transaction-related data, and tap into traditional financial sector fee streams. Such actions by tech giants, according to Chopra, cast a shadow over any expected widespread adoption of innovations such as near-field communications (NFC) technology – for example, “tap-to-pay”.
Apple’s stipulation that NFC payments conducted on Apple mobile devices be processed via Apple Pay has reportedly slowed its technology’s growth. Although supporting strong competition against established Wall Street banks and card networks, Chopra highlighted apprehensions that large tech firms might construct more obstacles inhibiting emerging smaller firms’ success.
In the coming month, the CFPB plans to propose rules aimed at providing consumers more control over their personal financial data. The structure surrounding these rules aims to boost open banking and payments, thereby enabling consumers to switch services more effortlessly, as assured by the bureau.
Nevertheless, the pursuit of big tech’s influence in the mobile payments sector by the CFPB brings to surface vital questions concerning competition and consumer choice. By providing platforms for payment processing, tech giants like Apple and Google might monopolise the sector, hindering competition, and limiting consumer options. On the contrary, such involvement might also be seen as diversifying and strengthening financial service offerings. Still, as the development and implementation of these technologies continue, the need for effective consumer protection grows as markets evolve, ensuring the best possible outcomes for both consumers and businesses alike.
Source: Cointelegraph
