The Consumer Financial Protection Bureau (CFPB) is moving to regulate tech giants like Apple and Google, which offer digital payment apps and wallets.
The CFPB has noted that platforms such as Apple Pay and PayPal have increased their market presence significantly, blurring the lines between traditional banking, payments, and commercial activities. However, these payment service providers do not currently face the same level of regulatory oversight as banks and credit unions.
To address this discrepancy, the bureau has proposed a rule that would require non-bank financial companies processing over five million transactions annually to comply with the same regulations as large banks and credit unions. This proposed rule would impact approximately 17 companies, including major players like Google, Apple, PayPal, and Block, the operator of CashApp. Under this regulation, these firms would need to follow laws related to funds transfer, privacy, and consumer protection.
CFPB Director Rohit Chopra emphasized the importance of regulating these payment systems, stating, “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.”
In 2021, the CFPB also requested information from Amazon, Apple, Facebook, and Google regarding their payment systems to better understand how they collect and utilize customer data.