The Consumer Financial Protection Bureau (CFPB) has proposed a new regulation that aims to bring digital payment apps and wallets under its regulatory oversight. The agency is calling for federal regulatory oversight of nonbank companies that offer these services, in an effort to ensure consumer protection and fair competition.
According to CFPB Director Rohit Chopra, payment systems are critical infrastructure for the economy, and it is important to subject large technology firms and other nonbank payments companies to appropriate oversight. The proposed rule would require companies handling more than 5 million transactions per year to be subject to the CFPB’s supervisory examinations.
Millions of people use digital apps for financial services, such as sending money to family and friends and making consumer retail purchases. The CFPB notes that the volume of e-commerce payments made through digital payment apps is similar to or greater than traditional payment methods like credit cards and debit cards. However, as the use of these apps has increased, so have complaints about them and the companies that operate them.
The proposed regulation would cover about 17 providers of general-use digital consumer payment apps that meet the rule’s transaction threshold. While the specific entities to be covered have not been specified, it is likely that payment platforms like Google Pay, Apple Pay, PayPal, and CashApp would fall under the regulation.
Under the rule, large nonbank companies offering digital payments and wallets would be supervised by the CFPB to ensure compliance with federal consumer financial protection laws. This includes protections against unfair, deceptive, and abusive practices, as well as consumer rights related to money transfers and privacy.
The CFPB’s goal with this regulation is to enforce consumer financial protection laws consistently between non-depository and depository institutions, promoting fair competition in the market. The proposed rule is currently in a public notice and comment period, expected to end in early 2024, after which the CFPB may submit a final rule.
It is important to note that the regulation of digital payment apps and wallets has become a topic of interest and concern, as their usage continues to grow. The CFPB’s proposal aims to address potential issues and ensure the protection of consumers in this rapidly evolving landscape.
