- Meta Platforms Inc., Apple Inc., Alphabet Inc., and other entities providing digital wallets and payment applications could come under the oversight of the US Consumer Financial Protection Bureau (CFPB) according to a newly proposed rule, designed to subject nonbanks to regulations akin to their traditional counterparts.
- The CFPB, in a statement on Tuesday, outlined that companies processing more than 5 million transactions annually would be subject to regulation similar to banks, credit unions, and other financial institutions already within the purview of the CFPB. If the rule is formally adopted, CFPB examiners would have the authority to monitor compliance with federal money-transfer laws and assess payment apps for potential instances of unfair, deceptive, or abusive conduct. While the CFPB can intervene if nonbanks engage in unlawful activities, its current regulations do not permit regular supervision of their day-to-day operations.
Why it matters
The use of digital payments to store and send money — services such as PayPal’s Venmo and Block’s Cash App — has boomed in recent years as consumers use their phones and other electronic devices for transactions. While banks have largely facilitated these services in the past, technology companies have now stepped in, according to the CFPB, and safeguards that consumers tend to take for granted, including deposit insurance, may not apply.