The most popular apps covered by the rule collectively process more than 13 billion consumer payments a year, the CFPB said.
The Consumer Financial Protection Bureau on Thursday issued a finalized version of a rule saying it will soon supervise nonbank firms that offer financial services likes payments and wallet apps.
While the CFPB already had some authority over digital payment companies because of its oversight of electronic fund transfers, the new rule allows it to conduct"proactive examinations" to ensure legal compliance, enabling it to demand records and interview employees.it wanted to extend its oversight to tech and fintech companies that offer financial services but that have sidestepped more scrutiny by partnering with banks.
The most popular apps covered by the rule collectively process more than 13 billion consumer payments a year, and have gained"particularly strong adoption" among low- and middle-income users, the CFPB said on Thursday."What began as a convenient alternative to cash has evolved into a critical financial tool, processing over a trillion dollars in payments between consumers and their friends, families, and businesses," the regulator said.
The initial proposal would've subjected companies that process at least 5 million transactions annually to some of the same examinations that the CFPB conducts on banks and credit unions. That threshold got raised to 50 million transactions in the final rule, the agency said Thursday. The new CFPB rule is one of the rare instances where the U.S. banking industry publicly supported the regulator's actions; banks have long felt that tech firms making inroads in financial services ought to be more scrutinized.
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