Apple’s mobile payments service, Apple Pay, is facing increased regulatory scrutiny from the US Consumer Financial Protection Bureau (CFPB). The CFPB is targeting big tech firms with digital payment platforms, including Google, Zelle, and Apple, which dominates the US mobile payments market. If approved, these proposals will subject these payment systems to the same level of scrutiny as banks. While banks are content with this development, tech firms are unhappy.
This is not surprising, considering that banks have been losing ground to tech firms in their own industry. This trend can be traced back to around 2008 when trust in banks collapsed after the global financial crash. Since then, technology firms have been capitalizing on the profitable aspects of banking, such as payments, investments, credit, and merchant acceptance.
Now, the banks are fighting back by leveraging CFPB regulations. It is interesting to observe how concepts like “consumer choice” and “openness” are frequently used to protect failing business models. From the perspective of industry incumbents, it is fair for tech firms to meet the same regulatory requirements as banks, as they are benefiting from the industry’s revenue streams.
This reflects the culture of the old boys’ club, where tech firms must play by the rules if they want to join the banking party. Banking, like any App Store, relies on generating profits from small transactions. The differentiating factor lies in the user experience and the size of the transaction fee.
For tech firms, the focus is on creating excellent user experiences. They have identified pain points in the traditional banking models and have sought to address them. This is evident in Apple Card, where Apple and its partner, Goldman Sachs, reinvented the credit card with better design. It is also noticeable when using Apple Watch for contactless payments.
As consumers have become accustomed to mobile payment services, they have come to appreciate the convenience and security they offer. Mobile payments have simplified international travel and reduced the need for physical cash. However, one challenge is that some big tech firms’ services do not always provide the same level of safeguards as traditional services, leading to potential misunderstandings among consumers.
2023-11-09 10:41:08
Link from www.computerworld.com