Tech companies like Apple, Google, and PayPal, along with other digital payment services that handle over 13 billion financial transactions annually, will now face government oversight, according to a new rule from the U.S. Consumer Financial Protection Bureau (CFPB). Announced on Thursday, the rule subjects digital wallets and payment apps to the same level of scrutiny as traditional banks, aiming to protect consumer privacy, prevent fraud, and stop the improper closure of accounts.
The regulation, initially proposed a year ago, applies to services like Apple Wallet, Google Pay, and Venmo. It represents a significant step in regulating the growing digital payment industry. CFPB Director Rohit Chopra emphasized that digital payments have become essential, and regulatory oversight must reflect this shift. The rule is expected to cover seven major nonbank firms, which together account for 98% of the digital payments market.
The new oversight involves close monitoring to ensure companies comply with federal laws, a standard practice for banks. Some representatives of the banking industry have supported this move, arguing that services offering bank-like functions should be regulated similarly. However, the Financial Technology Association, which includes companies like Amazon Pay, PayPal, and Intuit, criticized the rule and called for its withdrawal, stating it doesn’t address a specific problem.
Significant changes were made to the final rule compared to the initial proposal. For example, companies must now process at least 50 million transactions annually to fall under the rule, a jump from the originally proposed threshold of 5 million. Additionally, the rule only applies to transactions in U.S. dollars, excluding digital assets with monetary value. The regulation will take effect 30 days after it is published in the Federal Register.
Author: shadjavist
Humble gentleman who never believes in impossibility
