From CNBC: 2024-11-21 09:05:05

Rohit Chopra, director of the CFPB, testified during a Senate hearing on Nov. 30, 2023. The CFPB issued a finalized rule to supervise nonbank firms offering financial services like payment and wallet apps, including tech giants and payment firms processing at least 50 million transactions annually.

This new rule allows the CFPB to treat tech companies more like banks, subjecting them to proactive examinations for legal compliance. The oversight will help protect consumer privacy, prevent fraud, and illegal account closures as digital payments become more essential in daily life.

The CFPB’s oversight extension to tech and fintech companies aims to regulate popular payment apps that process over 13 billion consumer payments annually. The rule covers apps widely adopted by low- and middle-income users, reflecting the shift towards mobile-based financial tools for everyday transactions.

Initially proposing oversight for companies processing 5 million transactions yearly, the final rule raised the threshold to 50 million transactions. Excluded from the rule are payment apps limited to specific retailers like Starbucks. The U.S. banking industry publicly supported the regulator’s actions, welcoming increased scrutiny on tech firms in financial services.

The new CFPB rule will take effect 30 days after publication in the Federal Register, marking a significant step towards ensuring legal compliance and consumer protection in the rapidly evolving digital payment landscape.

Read more: CFPB expands oversight of Apple Pay, other digital payments services