The bigger issue seems to be that people are forced more into picking one or the other. Some people have a mixed setup. I think nostr:npub1f6ugxyxkknket3kkdgu4k0fu74vmshawermkj8d06sz6jts9t4kslazcka is in that camp. I'm all the way into the GrapheneOS end with no Google services and that's fine for me, but not for most people. So they either have stock Google and none of the cool shit (assuming you may be wrong about the KYC part) or have to completely dive into the deep end like me and give up some of the stuff they used. And even though Graphene has sandboxed Play store and services, I can confirm that some applications have never functioned properly on my wife's phone after switching, even though they worked fine on stock.

I'm sure there are other issues I'm missing. I think I've had banking apps refuse to work even with google services (some integrity check, I can't remember, switched banks). I don't use the NFC payment stuff, so not sure how it works, but it would be a problem for many people if it didn't.