CFPB expands oversight of Big Tech payment apps – Apple, Google, PayPal & more

The Consumer Financial Protection Bureau (CFPB) has finalised a rule extending its supervisory authority to nonbank digital payment providers handling over 50 million transactions annually. The move subjects major players like Apple Pay, Google Pay, PayPal, Venmo, Zelle, and Cash App to the same level of scrutiny as traditional financial institutions, with a focus on privacy, fraud prevention, and illegal account closures.

The decision comes as digital payments become a critical part of consumer financial activity, handling trillions of dollars in transactions annually. CFPB Director Rohit Chopra emphasised the importance of addressing regulatory gaps in the rapidly evolving payments landscape, stating, “Digital payments have gone from novelty to necessity and our oversight must reflect this reality.”

A narrowed scope with broad implications

Initially, the CFPB had proposed including firms with over 5 million annual transactions, which would have impacted 17 companies. The final rule increased the threshold to 50 million transactions, narrowing its scope to seven major providers. Payment apps exclusive to specific retailers, such as Starbucks, remain exempt.

The new rule will enable the CFPB to conduct proactive examinations, demand records, and interview employees of these firms. It aims to bolster consumer protections by addressing vulnerabilities such as fraud, unauthorised account freezes, and potential misuse of consumer data. These measures are particularly significant for lower- and middle-income users, who rely heavily on these platforms as de facto banking solutions.

Industry reactions

While the U.S. banking industry has largely supported the move, arguing that Big Tech’s foray into financial services requires greater oversight, critics from the fintech sector have voiced concerns. Financial Technology Association CEO Penny Lee described the rule as “deeply flawed,” predicting reduced competition, fewer services, and higher costs for consumers. “We urge the Bureau to withdraw this rule,” she stated.

Despite these criticisms, analysts suggest the oversight aligns with bipartisan concerns about Big Tech’s unchecked influence. Jaret Seiberg, an analyst at TD Cowen, noted, “We see little incentive for [future administrations] to reverse this supervision designation.”

The CFPB highlighted that these payment apps process over 13 billion transactions annually, underscoring their role in modern finance. However, questions remain over how increased regulatory scrutiny will affect innovation and market dynamics. The rule, effective 30 days after its publication in the Federal Register, signals the CFPB’s commitment to levelling the playing field between traditional financial institutions and tech-driven disruptors.

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