Digital wallets and payment applications, like Apple Pay, Google Pay, Venmo, and PayPal, are now under enhanced regulations from the U.S. Consumer Financial Protection Bureau (CFPB), the federal organization tasked with governing financial services and safeguarding consumers.
A **new regulation** finalized on Thursday grants the CFPB the power to oversee the operations and policies of nonbank entities that offer digital payment and fund transfer solutions. This reclassification subjects these platforms, along with their Big Tech parent companies, to regulatory expectations akin to those applicable to conventional banking establishments. The CFPB will now have the ability to monitor data collection and sharing activities, supervise fraudulent transactions and dispute resolutions, and protect consumers from being “debanked” — a term denoting accounts being frozen or closed without proper procedure.
“Today’s regulation signifies the latest move to enhance scrutiny of major technology companies in consumer financial sectors,” stated the CFPB. The agency had earlier **cautioned** Big Tech firms in 2022 about their obligations under consumer protection legislation, particularly in relation to behavioral targeting in financial services.
The new regulation applies to payment applications and services that manage over 50 million transactions each year. As per the CFPB, the most commonly used apps facilitate more than 13 billion consumer transactions annually. These platforms have experienced rapid growth, particularly among middle- and lower-income users, overtaking traditional debit and credit card transactions. A **2023 CFPB report** indicated that the amount of money transferred via payment apps increased fourfold from 2018 to 2022, with billions of dollars held outside of federally insured banks or credit unions. This development has prompted concerns about heightened risks of fraud and financial losses.
“Digital payments have evolved from being a novelty to a necessity, and our oversight must reflect this fact,” said CFPB Director Rohit Chopra in a news release. “The regulation will assist in safeguarding consumer privacy, protecting against fraud, and preventing unlawful account closures.”
As digital payment platforms continue to gain popularity, this regulatory change seeks to ensure enhanced accountability and consumer protection in a progressively cashless economy.