US Consumer Protection Agency Issues Warning to Apple Over Tap to Pay

The US government’s primary consumer protection agency, currently developing regulations regarding the sharing of consumer financial information, cautioned tech giants against imposing excessive restrictions on access to payment applications. This statement indirectly criticized Apple Inc.’s exclusive tap-to-pay technology.

As Apple and Alphabet Inc’s Google Pay dominate the tap-to-pay market for mobile devices, the restrictions they impose on app developers’ ability to use the technology could limit consumer choice, the Consumer Financial Protection Bureau said. Apple requires iOS device users to turn to Apple Pay for tap payment transactions, preventing direct integration with apps like Venmo, while Google’s Android operating system does not, but the concern is that Google “could change this position in the future,” the office 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 released Thursday.

Paying with a tap has exploded in recent years as mobile devices become more common, making paying with a smartphone even more desirable. The CFPB estimates that nearly 56 million consumers used Apple Pay for in-store payments in April 2023 alone.

In the coming months, the bureau is preparing to publish open banking regulations that will largely dictate how financial firms share consumer data. Big tech companies like Apple and Google influence whether consumers can make payments with third-party apps, said Rohit Chopra, director of the agency.

“We are carefully evaluating the role of Big Tech in our banking and payments system,” Chopra said in a statement about the report. Nearly two years ago, the CFPB ordered major tech companies to hand over information about their payment systems, foreshadowing further action by the bureau.

Read more: How Open Banking opens up more consumer finance applications: QuickTake

Representatives for Apple and Alphabet did not immediately respond to requests for comment on Thursday.

“Any company-imposed friction on the availability of essential hardware or software could impede the transition to open banking and ultimately negatively impact consumers — for example, by reducing competition, innovation, choice and ease of use,” the CFPB said in its report.

Apple also faces another European Union antitrust probe after the bloc’s competition investigators sent a series of questions to retailers as part of an ongoing investigation into the iPhone maker’s heavily guarded payment chip. The move, confirmed in May by a European Commission spokesman, follows formal EU antitrust charges brought against Apple a year earlier, which alleged that its actions restricted competition in the mobile wallet market for iOS devices.

Earlier this year, Apple confirmed plans to let merchants accept payments via 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 limited to tapping to pay with Apple Pay.