The Consumer Financial Protection Bureau issued a rule stating that it will soon supervise nonbank firms that offer financial services such as payments and wallet apps. Tech giants like Apple, Google, and Amazon, as well as fintech firms like PayPal and Block, will fall under the review if they handle at least 50 million transactions annually. The new rule allows the CFPB to treat these companies more like banks, subjecting them to proactive examinations to ensure legal compliance.
The CFPB Director, Rohit Chopra, emphasized the need to protect consumer privacy, guard against fraud, and prevent illegal account closures in the evolving digital payments landscape. The rule aims to reflect the reality of digital payments transitioning from a convenience to a critical financial tool for many Americans, particularly low- and middle-income users.
Initially, the proposal would have subjected companies that process at least 5 million transactions annually to examinations, but this threshold was raised to 50 million transactions in the final rule. This limited the expanded powers to just seven companies, excluding payment apps that only work at a particular retailer.
The banking industry has publicly supported the new rule, as they believe that tech firms entering financial services should be more scrutinized. The rule will take effect 30 days after its publication in the Federal Register, but it remains to be seen whether the incoming Trump administration will make any changes to it. Overall, the rule aims to ensure that tech and fintech companies offering financial services are held to the same standards as traditional banks and credit unions.
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