Apple Pay should be regulated like big banks to avoid terrorist attack, exec says

Apple Inc.’s new payment system and others like it should be subject to the same regulations as the biggest U.S. banks to head off attacks by terrorists and computer hackers, BB&T Corp. Chief Executive Officer Kelly King said.

The possibility that a terrorist hacks into the financial system through a third-party payments company is a “greater threat” than if a similar attack were leveled against a community lender, King said yesterday in an interview. “We have to start raising awareness of this issue.”

Regulators should consider whether such firms qualify as systemically important financial institutions, King, 66, said at a panel discussion in New York at the Clearing House annual conference. Such a designation could lead to tighter capital, leverage and liquidity rules like those faced by banks. While King said he favors healthy free-market competition between banks and nonbanks, industry regulations make that impossible, he said.

“We are headed toward a socialist system,” he said, smiling and drawing laughs from the audience. “My hope is that going forward we will have a healthy shadow and regular banking system” all subject to a similar regulatory regime, he said.

Apple, which debuted its Apple Pay mobile-payment system in October, allows shoppers to pay by placing their mobile phones next to a wireless transceiver at checkout counters. A spokeswoman for the Cupertino, California-based company
didn’t respond yesterday to a request for comment.