CFPB Advocates Oversight of Payment and Digital Wallet Tech Giants in the U.S
CFPB has proposed implementing bank-like supervision on digital payments and smartphone wallet services offered by Tech Giants.
The Consumer Financial Protection Bureau (CFPB) has proposed implementing bank-like supervision on digital payments and smartphone wallet services offered by Tech Giants. The proposal would apply to approximately 17 companies, including Alphabet, Apple, PayPal, and Block’s CashApp, collectively responsible for over 13 billion payments annually.
The CFPB believes that these companies, despite their extensive scale and scope, lack sufficient consumer safeguards compared to traditional payment methods. As a result, the watchdog intends to examine the companies’ privacy protections, executives’ conduct and adherence to laws prohibiting unfair and deceptive practices.
The proposal signifies a long-awaited step by the CFPB to assert its complete authority over payments Big Tech, a sector criticized for privacy and competition concerns. The CFPB stated that the tech industry has ventured into financial services typically offered by the tightly regulated banking sector, requiring appropriate oversight.
Payments Tech Requires Financial Oversight
The proposal would be applicable to companies processing over five million transactions annually. The agency stated that this rule would promote competition by ensuring that both traditional financial institutions and the tech sector are subject to equal oversight.
The CFPB asserts that in order for a healthy, innovative, and competitive financial services ecosystem to thrive, consumers must be assured of equal protection, regardless of their choice of financial service provider.
Previously efforts have been made by the European Union to exert greater control over Big Tech. This was evident when the French competition authority (FCA), conducted a raid on Nvidia’s offices, citing concerns about the company’s dominance in the GPU market and its role in powering AI technologies and crypto mining. This action was part of a wider initiative by European authorities to curb the monopolistic tendencies of Big Tech giants and promote fair competition in the tech sector.
The proposal is currently undergoing a notice-and-comment period, which is anticipated to conclude in early 2024.
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