The director of the Consumer Financial Protection Bureau (CFPB), Rohit Chopra, has concerns about Apple Pay Later that include antitrust, privacy, and indebtedness. In addition to this, the agency wants to look into whether such offerings may reduce competition and innovation in the market.
Big Tech’s entry into the lending business is raising regulatory concerns, Apple Pay also under fire
The ‘buy now, pay later’ (BNPL) market is already on CFPB’s radar. However, with Apple being the latest player to enter the market, Chopra said his agency would “have to take a very careful look [at] the implications of Big Tech entering this space”.
According to the Financial Times, Chopra’s comments are meant to be a warning shot to Silicon Valley following Apple’s decision to launch its own BNPL service. Chopra said Big Tech’s entry into short-term lending “raises a host of issues”, including how consumer data is being dealt with. “Is it being combined with browsing history, geolocation history, health data, other apps?”
“Big Tech’s ambitions when it comes to ‘buy now, pay later’ are inextricably linked to the desire to dominate the digital wallet,” said Chopra. One of the biggest issues that the CFPB is concerned about is whether other companies will be able to compete if they do not offer installment plans.
“Any tech giant that has a lot of control over a mobile operating system is going to have unique advantages to exploit data and ecommerce more broadly,” he added. Companies who have integrated payment networks into their operating systems will keep pushing further into financial services, “to gain even deeper insights on consumer behavior.”
Chopra expressed his concerns about the possible domination of Big Tech in financial services. He references the payments landscape in China where Alipay and WeChat pay have 2 billion combined users. “I generally worry that we are lurching toward that type of system,” he said.
The CFPB will soon publish an initial report with the data it has gathered from five BNPL companies: Afterpay, Affirm, Klarna, PayPay, and Zip. The report will also include the “potential next steps from a regulatory perspective.”
Apple Pay Later was introduced for Wallet as a part of iOS 16 during WWDC 22. Apple Pay Later will allow users in the United States to split the cost of an Apple Pay purchase into four installments which they can pay over the course of six weeks. “Apple Pay Later is available everywhere Apple Pay is accepted online or in-app, using the Mastercard network,” Apple has confirmed. In addition, the tech giant has said that there are no hidden fees and zero interest when using the feature.