Meta, Apple At Risk of Increased Regulation of Digital Wallets

tech.hindustantimes.com:

Meta Platforms Inc., Apple Inc., Alphabet Inc. and other companies that offer digital wallets and payment apps would fall under US Consumer Financial Protection Bureau supervision under a newly proposed rule aimed at treating nonbanks more like traditional counterparts.

Companies handling more than 5 million transactions per year would be regulated like banks, credit unions, and other financial institutions already under the CFPB's supervision, the agency said in a statement Tuesday. CFPB examiners would be able to monitor payment apps for compliance with federal money-transfer laws, as well as for unfair, deceptive, or abusive conduct, should the rule be finalized. The agency can already step in if nonbanks act unlawfully, but it can't regularly supervise their operations under current rules.

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“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,” CFPB Director Rohit Chopra said in the statement. 

The use of digital payments to store and send money — services such as PayPal Holdings Inc.'s Venmo and Block Inc.'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. 

The CFPB doesn't have authority over deposit insurance, so it wouldn't be able to enforce those types of protections even if additional oversight is approved, but the agency would be able to know if companies are