CFPB finalises rule to supervise big tech firms offering digital payment apps
The US Consumer Financial Protection Bureau (CFPB) has this week finalised a rule to supervise big tech firms operating digital wallet and payment apps in consumer financial markets.
CFPB finalises rule on federal oversight of popular digital payment apps
The development cements proposals first put forward by the regulator in November last year, and includes “several significant changes” to how big tech firms must comply with existing standards.
The CFPB estimates that the most widely used apps covered by the rule collectively process over 13 billion transactions for consumers annually.
The regulator says the rule “will help the CFPB to ensure that these companies – specifically those handling more than 50 million transactions per year – follow federal law just like large banks, credit unions, and other financial institutions already supervised by the CFPB”.
The regulator will look to supervise these companies in three key areas: data collection and data sharing, the handling of payment disputes and fraud, and service disruptions and debanking.
These companies will now fall subject to the CFPB’s newly increased ability to conduct “proactive examinations” into their compliance with its rulings in these and other areas, in line with existing measures applied to banks and credit unions.
However, the CFPB has limited this scope to transactions conducted in US dollars only, given “the evolving market for digital currencies”.
“Digital payments have gone from novelty to necessity and our oversight must reflect this reality,” comments Rohit Chopra, director of the CFPB.
“The rule will help to protect consumer privacy, guard against fraud, and prevent illegal account closures.”
This latest ruling is set to take effect 30 days after publication in the Federal Register.
In actioning the ruling, the CFPB says it has also devised a supervision technology programme to assess, among other things, “technology and technology controls and its impact on compliance with Federal consumer financial law”.
