Comment to CFPB on Big Tech Payment Platforms

In October, the CFPB sent orders to 6 major Big Tech firms — Google, Apple, Facebook, Amazon, Square, and PayPal — requesting information concerning their entry into the payments space, with products including P2P payment and mobile wallet apps such as Venmo, Cash App, Apple Pay, Amazon Pay and Google Pay. Download the comment filed in the investigation’s docket by U.S. PIRG and the Center for Digital Democracy as a .pdf here. It highlights our concerns over the firms’ pervasive online surveillance business models and the impact of their entry on consumers, competitors, the regulated banking system and the economy itself. Excerpt:

“USPIRG and CDD believe the U.S. is at an especially critical inflection point regarding digital platforms, digital payment services and online consumer protection: the pervasive tracking of data on individuals, families and groups, online and off; the nearly real-time ability to target a consumer with financial and other product offers regardless of where they are or device they use; and the development of a highly sophisticated and now machine-driven apparatus to deliver personalized marketing and communications, have all led to a largely unaccountable digital marketplace. A handful of digital platform giants and their partners stealthily operate what is known as a “surveillance marketing” system, which now pervades every aspect of our lives—increasingly affecting how the public engages with the financial services sector.” […]

“We see numerous platform and other online practices posing threats to fairness, privacy, equity, justice, and consumer rights in the financial services marketplace. The online environment is now our public square, workplace, recreational destination and where we reside. The amount of time Americans spend online illustrates how this system is so intertwined in our lives—eight hours a day. This includes time spent on mobile, social media, video streaming, digital audio and desktop computing.[1] According to one report, “ninety-five percent of U.S. adults [now] own a device with which they could make a transaction,” facilitated via a “slew of high-profile partnerships [enabling] payments on these devices.”[2] In fact, the majority of Americans—some 77 percent—use digital payment applications, including in-app transactions, peer-to-peer money transfers, and in-store mobile payments.[3] Mobile devices now serve as contactless terminals for payment processing as well.[4] The digital system will only grow in power and influence, becoming the essential link for consumers and businesses to engage with all manner of financial services. We believe the Bureau should especially analyze how the confluence of platforms and digital payment services could further exacerbate the fragile financial state of Americans now struggling—or who faced historic discriminatory treatment—in our economy.”

 [1] Audrey Schomer, “US Time Spent with Media 2021: Digital Media Usage Gains After the 2020 Pandemic Year, but Traditional Formats Fade,” eMarketer, 27 May 2021, https://content-na1.emarketer.com/us-time-spent-with-media-2021.

[2] Jaime Toplin, “The Payments Ecosystem,” eMarketer, 15 Jan. 2021, https://content-na1.emarketer.com/payments-ecosystem.

[3] Stephen Whiteside, “Understanding the Four User Groups for Digital Payments,” WARC Event Reports, Money 20/20, Oct. 2019, https://www.warc.com/content/article/event-reports/understanding-the-fou…. There is also “grab and go” commerce, such as via Amazon Go. See, for example, Amazon Go. https://www.amazon.com/b?ie=UTF8&node=16008589011.

[4] Mark Gurman, “Apple Buys Startup to Turn iPhones Into Payment Terminals,” Bloomberg, 31 July 2020, https://finance.yahoo.com/news/apple-buys-startup-turn-iphones-002443381… Mastercard, “Tap on Phone,” https://www.mastercard.com/global/en/business/overview/start-accepting/t….