US watchdog wants Apple Pay regulated like a bank

AppleInsider

The US Consumer Financial Protection Bureau has proposed that digital wallets such as Apple Pay should be regulated, and currently lack safeguards.

Apple Pay on an Apple Watch

The Consumer Financial Protection Bureau (CFPB) has been investigating Big Tech's digital wallets, including a "very careful look" at services such as Apple Pay Later. It's now proposing that 17 firms from Apple and Google, to PayPal and Block's CashApp, should be subject to supervision.

"Today's rule would crack down on one avenue for regulatory arbitrage," CFPB director Rohit Chopra told Reuters, "by ensuring large technology firms and other nonbank payments companies are subjected to appropriate oversight."

It's not clear precisely what regulatory framework the CFPB wants to install. However, Reuters reports that the regulator is focused on the privacy of financial transactions in particular.

Chopra says that its proposal for regulation would apply to companies handling in excess of five million transactions a year. It's not known how many transactions Apple Pay sees annually, but for 2022, the value of payments it processed was $6 trillion.

The CFPB is now accepting comments over its proposal, and this period is planned to conclude in early 2024.

Separately, this move by the US authorities to add monitoring and safeguards to digital wallets a similar plan in Australia. Apple has already objected to that expansion of regulation.,

"Apple believes the proposed expansion... will increase regulatory burden without aa net public benefit, give rise to... regulatory error," Apple said in October 2023, "and stifle the dynamic innovation that has characterised Australia's payment system over recent years."

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6ryph3n

I trust Apple with my privacy far more than I trust anyone in our government. This is nothing more than an excuse to give them more access to our personal finances.

kelemor

Prolly because it has to much privacy and they don’t like it. 

xed

The problem with this proposal is that Apple Pay is for the secure setup of the card, but transactions aren't be funneled through Apple's servers the way it is for Pay Pal, Venmo, and CashApp.

beowulfschmidt

I suspect Apple Pay is being lumped in with the far more problematic CashApp and PayPal for three major reasons.  For one thing, they are similar products, i.e. they can maintain a balance and they can withdraw and deposit funds from and to actual banks.  Second, CashApp is rife with fraud.  I've seen loads of reports from people who've had money taken from their CashApp without their consent or (apparent) action and CashApp basically shrugging and saying "oh well, nothing we can do..."  To the extent that people aren't simply lying to cover up their own stupidity (which I've also noticed) there is literally no fraud protection on these payment systems.  Third, expansion of government regulation in this area is purposeful; they simply want to control how you spend your money.

robin huber

Solution in search of a problem. 

ranson

6ryph3n said:

I trust Apple with my privacy far more than I trust anyone in our government. This is nothing more than an excuse to give them more access to our personal finances.

The proposed regulations have nothing to do with accessing or viewing customer financial information. The only time the Consumer Financial Protection Bureau has access to consumer data is when a consumer voluntarily provides it as part of a complaint. Millions of Americans have filed complaints with the CFPB. For context, the Bureau was created to ensure that we as consumers don't get ripped off by powerful service providers. That is its only mission, and it has returned tens billions of dollars to consumers over the last decade. Yes, more regulation is generally bad. But the CFPB is one of the few good guy regulators that are focused on protecting all Americans' financial health from greedy corporate interests - and they have the receipts to prove it.

To that end, this is more about ensuring that Google, CashApp, Apple, etc. are doing everything possible to protect the consumers' interests and preventing consumers from being subjected to unfair business practices. For example, Google could decide tomorrow that they will start charging a small fee to withdraw one's own cash balance without providing the opportunity to withdraw and switch providers prior to such a policy change. Or they could start charging a fee to initiate a person-to-person cash transaction from an in-app cash balance. Or they could be putting your saved funds into risky investments that are underinsured, risking your balance without your consent. In the past, when business have done shady things like these, the CFPB has stepped in and forced the bad actors to return the funds to the consumer.

As a hardcore fanboy, I trust Apple more than anyone. But, due to the Equal Protection Clause of the 14th amendment, the government can't pick and choose which companies they think are bad and only regulate on those. They have to regulate the whole Market or not at all. Right now, there are very few rules for these companies to follow. And since we really can't trust Google, Cash, etc.; we need proactive consumer protections to prevent them from finding new ways to screw over their users in the future, and penalize them when they do it anyway. As Apple is also operating in this Market, they must be subjected to those same regulations, even though they are likely already operating on the level. So at the end of the day, any new regulation would likely not be impactful to Apple, thus there is not much reason to recoil at this.

Xed said:

The problem with this proposal is that Apple Pay is for the secure setup of the card, but transactions aren't be funneled through Apple's servers the way it is for Pay Pal, Venmo, and CashApp.

Any regulations on credit card handling would likely be to ensure consumers do not face price increases due to potentially exorbitant processing fees being imposed by Google Pay or ApplePay. Otherwise, regulations would likely be focused on liquid cash services like ApplePay Cash and the savings account feature; and on any of the loan-based 'Pay Later' services.

edited November 2023

jimh2

If you cannot compete or are getting beaten at your own game, call your friend at a regulatory agency (this one is CFPB) and tell them to "look" into it and regulate them to the point of pain. These agency could care less about the end customer.