The Consumer Financial Protection Bureau (CFPB) in the U.S. is tightening federal oversight of major nonbank entities that provide digital payment services.
The CFPB finalized updated rules for supervising leading tech companies that serve as providers of digital wallets and money transfer apps. Federal oversight will now be strengthened primarily for those organizations processing more than 50 million transactions per year.
The initiative emphasizes three key goals, namely:
- strengthening personal data protection;
- reducing fraud;
- preventing illegal debanking.
The CFPB estimates that the most widely used applications subject to these updated regulations collectively handle over 13 billion consumer payment transactions annually. The new rules aim to ensure that providers of such services are regulated similarly to large banks, credit unions, and other financial institutions already under the CFPB oversight.
CFPB Director Rohit Chopra said in the press release that digital payments shifted from novelty to necessity, and regulatory oversight should reflect that reality.
Expanding digital payment capabilities for users is a global trend reflected in many innovations being introduced by major financial services companies. In early November, Mastercard launched a new service allowing cardholders to link their cards to popular digital wallets for payments at millions of merchants in the Asia-Pacific region.
