The U.S. Consumer Financial Protection Bureau (CFPB) is strengthening federal oversight of the largest non-bank organizations that provide digital payment services.
CFPB representatives reported the completion of updated rules for oversight of the largest technology companies that act as providers of digital wallets and money transfer applications. Federal oversight will be strengthened primarily over those organizations that process more than 50 million transactions per year.
The authors of the initiative identify three key objectives:
strengthening personal data protection;
reducing instances of fraud;
ending illegal debanking.
According to CFPB estimates, the most widely used applications covered by the updated document process a total of more than 13 billion consumer payment transactions annually. New rules will help ensure that the regulation of these service providers is conducted in the same manner as that of large banks, credit unions, and other financial institutions already under CFPB oversight.
Rohit Chopra, CFPB Director, noted in a press release that digital payments have transformed from a novelty to a necessity, and regulatory oversight must reflect this reality.
It is worth noting that the expansion of user capabilities in digital payments is a global trend reflected by numerous innovations being implemented by the largest financial companies. For example, 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.
