The rise in popularity of Apple Pay will now subject the tech giant to regulation by the US Consumer Financial Protection Bureau (CFPB), a regulatory body traditionally that oversees banks and financial service providers.
This ruling grants the bureau authority to supervise and regulate Apple’s practices and policies concerning its mobile wallet services…
The Consumer Financial Protection Bureau
The CFPB is a US agency dedicated to enforcing federal consumer financial laws, and it plays a vital role in regulating to ensure that consumer financial products are “fair, transparent, and competitive.”
Our goal is to make consumer financial markets operate effectively for consumers, responsible providers, and the economy overall. We shield consumers from unfair, deceptive, or abusive practices and take action against companies that violate the law. We empower individuals with the information, tools, and steps they need to make informed financial choices.
While the CFPB has always ensured that mobile wallet services like Apple Pay and Google Pay comply with the law, last year it proposed a framework to treat these services more like banks, thus granting the CFPB enhanced powers to enforce fairness and address consumer grievances.
Apple Pay Faces Regulation Next Month
Bloomberg reports that the proposal has been finalized and is set to take effect next month.
The leading US consumer watchdog will oversee Apple Inc. and other prominent tech companies that provide digital wallets and payment applications, finalizing a proposal from last year with several modifications.
The US Consumer Financial Protection Bureau will now regard these companies similarly to banks, as long as they process over 50 million transactions annually in US dollars, as stated in an announcement made on Thursday.
According to the agency’s director, this decision stems from the fact that mobile wallet services have become a fundamental aspect of people’s financial activities.
“Digital payments have evolved from being a novelty to a necessity, and our oversight must reflect this reality,” stated CFPB Director Rohit Chopra.
Currently, over 60% of the US population utilizes a mobile wallet, with Apple Pay being the preferred option.
DMN’s Perspective
Typically, Apple modifies its policies only when compelled by legislative measures in various jurisdictions. However, in this instance, the company has proactively decided to adapt.
The European Union mandated Apple to grant banks and credit card companies access to the NFC payment chip, and it was anticipated that the CFPB would impose a similar condition. Instead of confining this adjustment to the EU, Apple opted to implement it globally, positioning itself ahead of potential regulations.
It’s been over a decade since I first suggested that Apple could eventually become a banking entity. While this hasn’t materialized yet, significant progress has been observed in that direction. The company has already secured banking licenses to introduce Apple Pay Later, although it subsequently withdrew the service amidst the prospect of further regulation. Today’s announcement from the CFPB indicates that regardless of the labels Apple chooses, Apple Pay will now be subjected to regulatory scrutiny akin to that of banks.
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