US authority wants to monitor digital payment providers and wallets more

Large technology companies that offer digital payment transactions and the corresponding wallets will be subject to stricter monitoring in future. The US Consumer Financial Protection Bureau (CFPB) has adopted new rules that will see companies such as Apple and Google with their wallets for mobile payments treated like banks in future. This is intended to ensure greater data protection for users and better protect them from financial fraud.

The CFPB recently fined Apple Card and Goldman Sachs millions for defrauding customers. The Mastercard credit card marketed by Apple in the USA since 2019 and issued by the bank Goldman Sachs was problematic. The Apple Card was advertised with interest-free installment payments for the purchase of iPhones and other Apple products, but this was not automatically granted.

The CFPB has always been able to order such enforcement actions for organizations other than banks, but with the new digital payments rules passed on Thursday, proactive monitoring of such companies is also possible. The aim is to ensure that digital payment providers comply with the law and that any threats can be identified at an early stage.

Rules for over 13 billion digital payments per year

"Digital payments have gone from a novelty to a necessity, and our supervision must take this reality into account," explains CFPB head Rohit Chopra. Consumers now make more than 13 billion digital payments in a single year. In addition to protecting against data loss and fraud, the new rules are also intended to cover responsibility in the event of the loss of digital wallets.

The CFPB had already presented the new regulations last year, but they were adjusted before being adopted. Initially, 5 million digital transactions were to be processed by companies per year in order to fall under the new rules. Now it is 50 million. Furthermore, this only affects transactions in US dollars. Previously, the CFPB wanted to extend this generally to digital assets that can be used for purchases.

The CFPB does not mention which companies fall under the new rules, but CFPB staff expect seven unnamed non-banks to be affected, covering 98 percent of all market activity, according to a Reuters report.

Positive and negative feedback

Some members of the financial industry welcome the new rules, arguing that anyone offering banking services should be regulated like a bank. However, the Financial Technology Association (FTA), which includes Amazon Pay, eBay, PayPal and Wise, is calling on the CFPB to withdraw the regulation as it does not address clearly identified problems.

The new regulations come into force 30 days after publication in the Federal Register, the official gazette of the United States federal government.

(fds)