by Key Takeaways
- Like it does with banks, the Consumer Financial Protection Bureau will now aggressively monitor digital wallet programs like Apple Pay.
- To qualify for the additional inspection, an app must process 50 million or more transactions annually.
- Other apps that may be under supervision include Google Pay, PayPal, Venmo, and Cash.
In order to oversee non-bank wallet and transfer apps like Apple Pay and Google Pay, the US Consumer Financial Protection Bureau is moving forward with a rule.
According to the CFPB, digital firms will be scrutinized for mistakes, fraud, privacy, and “debanking,” or losing the ability to send and receive money, much like banks. Scams that target seniors and military personnel, as well as app developers that transfer fraud accusations to banks and card issuers instead of addressing them directly, are of particular concern, according to the bureau.
Although the CFPB was already empowered to take action in situations of misconduct, the new regulation allows for “proactive examinations” to guarantee legal compliance, similar to what banks do. However, in contrast to its original suggestion, the bureau is upping the threshold for the rule; now, oversight won’t begin until an app has 50 million transactions each year. Additionally, it restricts the restriction to transfers made in US dollars, leaving out cryptocurrencies like Ethereum and Bitcoin.
Since Apple and Google’s wallets are preloaded on phones, watches, and other gadgets and are used by countless numbers of people every day, they will undoubtedly come under the CFPB’s purview even though no specific businesses have been mentioned. According to CapitalOne, US consumers used Apple Pay to spend $199 billion in Q2 2022 alone. Third-party apps like Venmo, PayPal, and Cash will probably be subject to the rule as well.
According to a previous report, Google may be subject to CFPB oversight, though not necessarily as a result of Google Pay. The CFPB may also be worried about Google’s advertising and app store policies, as a US district judge said in August that the corporation has a search monopoly.
In order to address the monopoly, the US Justice Department has suggested several solutions, including Google selling off its Chrome browser and stopping payoffs that cause Google Search to be the default in browsers like Apple’s Safari. Although Google objects to those suggestions, it must make its own in December in preparation for a final court decision in September 2025.
