US watchdog worries about Apple’s foray into short-term lending

The US consumer credit watchdog has raised concerns about the tech giant’s foray into the buy it now and pay later (BNPL) space, the report reported. Financial Times.

The Consumer Financial Protection Bureau (CFPB) has warned that such developments could harm competition in an industry that is in its infancy and raises questions about how consumer data is used.

The warning for tech majors comes after Apple announced its intention to enter the BNPL fray.

Speaking to the publication, CFPB director Rohit Chopra said the watchdog “should be taking a very careful look [at] the implications of Big Tech entering this space”.

Among the questions the agency plans to examine was “whether it can actually reduce competition and innovation in the marketplace,” he added.

Responding to a question about Apple’s BNPL push, Chopra said the tech giants’ move into short-term lending “raises a host of issues,” including how companies would use customer data. . “Is it combined with browsing history, geolocation history, health data, other apps?”

Last month, Apple launched a BNPL offering in the US called Apple Pay Later, becoming the first and so far the only major tech player to do so.

The offer, which is available through Mastercard’s network online and in apps that support Apple Pay, allows customers to pay for their purchases in four installments over six weeks, with loans funded and underwritten by Apple.

In response to the CFPB Director’s remark, Apple said, “We are pleased to offer customers a choice that puts their financial health and privacy first with Apple Pay Later, and we look forward to working with the CFPB to answer all their questions.

Chopra said the development also raised concerns about whether other players would be able to compete and whether merchants could choose whether or not to offer installment plans.

“Big Tech’s buy-it-now, pay-later ambitions are inextricably linked to the desire to dominate the digital wallet,” Chopra noted.

Previously, the agency ordered Facebook, Apple, Amazon, Google, PayPal and Square to provide information about their payment systems, including how the companies collect and use consumer data.

“Any tech giant that has a lot of control over a mobile operating system is going to have unique advantages in leveraging data and e-commerce more broadly,” the agency’s director said.

Chopra alluded to the development in China where Alipay and WeChat Pay dominate this space with a combined user base of two billion.

“I generally worry that we’re heading towards that kind of system,” Chopra noted.

He warned that the US tradition of separating banking and commerce is “getting murkier and murkier” as tech majors set foot in the financial services space.

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