US watchdog wants Apple Pay regulated like a bank

Apple Pay on an Apple Watch

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

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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8 Comments

6ryph3n

said about 5 months ago

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

said about 5 months ago

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

Xed

said about 5 months ago

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

said about 5 months ago

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.