CFPB urges extending federal regulation of big tech and digital wallet providers

The Consumer Financial Protection Bureau (CFPB) suggested overseeing big nonbank companies that provide digital wallets and payment apps in the United States. These apps, often used by Big Tech and other large tech firms, are becoming more popular, but they haven’t been closely monitored by the CFPB. The new rule suggests that these larger nonbank financial companies, handling over 5 million transactions annually, should follow the same rules as big banks, credit unions, and other financial institutions already regulated by the CFPB.

According to CFPB Director, Rohit Chopra, payment systems are crucial for our economy, and these digital apps have become a significant part of how people send money and make retail payments. However, there have been rising complaints about these apps and the companies behind them.

Big Tech and other non bank companies in consumer finance sometimes mix banking, payments, and other business activities. This can put consumers at risk, especially when traditional banking protections don’t apply. Despite their impact on consumer finance, these companies haven’t faced the same level of oversight as banks and credit unions.

The proposed rule would change that by subjecting larger nonbank digital payment companies to CFPB oversight. This would help ensure that these companies follow the law when it comes to funds transfers, privacy, and protecting consumers. It would also level the playing field with traditional banks and credit unions.

This rule is part of the CFPB’s effort to keep an eye on big tech companies entering the consumer finance market. It’s the sixth in a series of rules that define larger players in different consumer finance sectors.