iStock ilustration

The Consumer Financial Protection Bureau is warning that Apple and Google restrictions on banking and other payment apps on mobile devices could hurt the growth of digital banking and payments in the US.

In a statement, the bureau said these restrictions to banking and third-party payment apps on leading mobile devices will “reduce consumer choice and inhibit progress toward a more robust open banking ecosystem.” The restrictions will discourage giving consumers more control over their personal financial information, the CFPB said, giving them access to extensive payment solutions and the ease of switching between providers.

The CFPB pointed out that Apple iPhone and other iOS devices do not permit third-party apps to access the near field communication (NFC) technology, which is necessary to execute tap-to-pay contactless payments. Apple Pay is the only option for tap-to-pay on iOS devices.

“All NFC-enabled payments must go through Apple Pay and card issuers must pay a fee to Apple for the privilege. As a result, many popular payment apps cannot directly use tap-to-pay,” CFPB Director Rohit Chopra said in a speech Thursday, according to his prepared remarks.

“Apple cites security and privacy as the justification for restricting third-party access to the NFC technology. Data protection is certainly paramount for consumers’ sensitive financial information. But it is not clear that a blanket NFC access ban is necessary to protect data security and privacy,” he added.

Google, on the other hand, does not currently restrict third-party payment apps access to the NFC chip on Android devices, but this policy “could change in the future,” CFPB said.

“Google’s regulations do not currently require that these payments are routed through Google’s proprietary wallet and over time we have seen some level of tap-to-pay competition and innovation on Android devices. Google, however, has been scrutinized by international authorities in the past for allegedly placing self-preferencing conditions on device manufacturers that use Android,” Chopra said.

The estimated $300 billion tap-to-pay market in the US across Apple Pay, Samsung Pay, and Google Play is forecasted to grow further, with analysts seeing the digital wallet tap-to-pay transactions expand by over 150 percent by 2028.

The bureau noted that there were around 25 million Google Pay users and 16.3 million Samsung Pay users in 2021, while about 97.5 million of the 130 million iPhone users monthly have activated Apple Pay. It added that a total of 55.8 million in-store payment using Apple Pay was made in April 2023, which accounted for nearly half of iOS users.

“Interoperability across consumer financial products and services is a key pillar of open banking, which facilitates greater consumer choice and ease of switching between providers. The retail payments system is rapidly evolving and the CFPB is evaluating the existing landscape to understand how regulatory changes could complement, or disrupt, the transition to open banking,” the CFPB said.