CFPB proposes federal oversight of providers of digital wallets, payment apps

The Consumer Financial Protection Bureau, or CFPB, is proposing to supervise larger nonbank companies that offer services like digital wallets and payment apps. “Driven largely by Big Tech and other large technology firms, digital payment apps and wallets continue to grow in popularity, but many of the companies are not subject to CFPB supervisory examinations. The rule proposed today would ensure that these nonbank financial companies – specifically those larger companies handling more than 5 million transactions per year – adhere to the same rules as large banks, credit unions, and other financial institutions already supervised by the CFPB,” the Bureau stated. “Payment systems are critical infrastructure for our economy. These activities used to be conducted almost exclusively by supervised banks. Today’s rule would crack down on one avenue for regulatory arbitrage by ensuring large technology firms and other nonbank payments companies are subjected to appropriate oversight,” added CFPB Director Rohit Chopra. Today’s proposed rule, if finalized, would be one part of the CFPB’s efforts to carefully monitor the entry of large technology firms, including Big Tech giants, into consumer financial markets. Publicly traded tech companies with digital wallets and payment apps include Block (SQ), PayPal (PYPL), Apple (AAPL), Amazon (AMZN) and Alphabet (GOOGL).