The rise of Apple Pay has led to the company being regulated by the US Consumer Financial Protection Bureau (CFPB), an agency traditionally focused on banks and financial service providers.
This shift grants the bureau the authority to oversee and regulate Apple’s operations regarding its mobile wallet services …
The Consumer Financial Protection Bureau
The CFPB is a federal agency in the US that enforces consumer financial laws while ensuring that financial products offered to consumers are fair, transparent, and competitive.
Our goal is to ensure that consumer financial markets work for consumers, accountable providers, and the economy at large. We shield consumers from unfair, deceptive, or abusive practices and take action against violators. We equip individuals with the information, steps, and tools necessary for making informed financial choices.
While it previously ensured compliance of mobile wallets like Apple Pay and Google Pay with legal standards, the CFPB proposed last year a framework to treat these services more like banks, thus extending its enforcement powers to ensure fairness and handle consumer grievances.
Apple Pay Set for Regulation Starting Next Month
Bloomberg reports that this proposal has been officially finalized and will be implemented starting next month.
The leading US consumer watchdog will now supervise Apple Inc. and other significant technology firms that provide digital wallets and payment applications, having finalized a prior proposal with various amendments.
The CFPB will regard these companies similarly to banks if they conduct over 50 million transactions annually in US dollars, according to a Thursday statement.
The agency’s director stated that this change was necessary because mobile wallet services have become an essential component of modern financial life.
“Digital payments have evolved from being a novelty to a necessity, and our oversight must align with this reality,” said CFPB Director Rohit Chopra in the announcement.
Currently, over 60% of Americans utilize a mobile wallet, with Apple Pay being the leading option.
DMN’s Perspective
Apple tends to wait until compelled by legislation to adjust its policies in various regions. However, in this instance, the company opted to take preemptive action.
The European Union mandated that Apple grant banks and payment card companies access to the NFC payment chip, and it was likely that the CFPB would have imposed a similar requirement. Rather than restricting changes to the EU, Apple decided to implement a global adjustment.
It has been over a decade since I speculated that Apple could eventually become a banking entity. While that hasn’t materialized yet, there have been notable shifts toward that direction. The company previously needed banking licenses to introduce Apple Pay Later but later offloaded that service amid concerns about excessive regulation. The CFPB’s recent announcement indicates that, regardless of how Apple brands its offerings, Apple Pay will now be subjected to oversight similar to that of banks.
Photo by Christiann Koepke on Unsplash
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