Are large corporations increasingly dictating the rules of the game in the world of mobile payment systems? This question has been raised by Rohit Chopra, the head of the U.S. Consumer Financial Protection Bureau (CFPB), during a fintech conference held by the Philadelphia Federal Reserve Bank on September 7. He expressed concern about the growing influence of big tech companies and the potential impact on smaller businesses.
Big Tech’s Growing Dominance in Mobile Payments
Chopra highlighted that big tech companies are extending their reach into the payments ecosystem, thereby strengthening their consumer engagement, collecting valuable transaction-related data, and tapping into traditional financial sector revenue streams. The fast-paced evolution of consumer payment systems, especially point-of-sale (POS) systems, has not been met with corresponding regulatory oversight, unlike crypto assets.
He particularly pointed out how Apple and Google have become significant players in mobile payment systems, which in turn has a considerable effect on consumers’ accessibility to mobile payment solutions. However, the adoption of near-field communication (NFC) technology, a popular “tap-to-pay” method, is not spreading as quickly as anticipated, given the popularity of other apps.
Challenges in the Mobile Payment Landscape
Chopra identified certain obstacles in the mobile payment landscape. One such issue is Apple’s stipulation that NFC payments made on its devices must go through Apple Pay. This requirement potentially hampers the widespread adoption of this technology.
Chopra voiced his concerns, stating, “While it’s crucial to challenge the dominance of Wall Street banks and card networks, there’s a real worry that large tech firms will erect even more barriers and toll booths, hampering the emergence and success of small firms.”
Upcoming Regulatory Measures
In light of these concerns, the CFPB is set to propose rules in October aimed at giving consumers more control over their personal financial data. These rules are designed to foster open banking and payments by making it easier for consumers to switch services, according to the bureau.
The CFPB also released a report detailing the impact of mobile devices and POS systems, echoing and expanding on Chopra’s points. The report discussed the implications of big tech’s involvement in mobile payments and the changes observed due to pandemic shutdowns.
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