The Consumer Financial Protection Bureau (CFPB) is proposing to supervise larger nonbank companies that offer services like digital wallets and payment apps such as Apple Wallet and Apple Pay.
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 aren’t subject to CFPB supervisory examinations. The CFPB’s proposed rule “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.”
“Payment systems are critical infrastructure for our economy. These activities used to be conducted almost exclusively by supervised banks,” says CFPB Director Rohit Chopra. “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.”
The proposed rule would subject larger nonbank digital consumer payment companies to the CFPB’s authority to conduct examinations, helping to ensure consistent application of federal consumer financial laws across the marketplace. Specifically, the proposed rule would help ensure these large nonbank companies:
- Adhere to applicable funds transfer, privacy, and other consumer protection laws: The CFPB would be able to supervise larger participants for compliance with applicable federal consumer financial protection laws, which includes applicable protections against unfair, deceptive, and abusive acts and practices, rights of consumers transferring money, and privacy rights.
- Play by the same rules as banks and credit unions: The CFPB’s supervision of these large companies can foster a level playing field with depository institutions. Greater supervision of nonbanks in this market would ensure federal consumer financial protection law is enforced consistently between non-depository and depository institutions in order to promote fair competition.
