The Consumer Financial Protection Bureau wants to extend its watchdog powers to cover digital wallets and payment apps run by nonbank companies like Apple, Google, PayPal and Block.
The bureau proposed a new rule on Tuesday that would subject large companies — those that process more than five million financial transactions per year — to the same supervisory examinations the bureau conducts on banks and credit unions. About 17 companies would be subject to the rule, according to a bureau official.
“Payment systems are critical infrastructure for our economy,” said Rohit Chopra, the C.F.P.B. director. “Today’s rule would crack down on one avenue for regulatory arbitrage by ensuring large technology firms and other nonbank payments companies are subjected to appropriate oversight.”
Mr. Chopra has been open about his desire to apply greater regulatory scrutiny to large technology companies. Last month, he warned about the “surveillance and censorship” that such companies can impose on consumers’ financial transactions, citing the wealth of personal details that can be gleaned from the payment trail recorded by apps like PayPal’s Venmo and Block’s Cash App.
A September report from the bureau spotlighted the ways Apple and Google use their dominance as mobile phone makers to steer customers toward their own tap-to-pay digital wallet products.
Consumers moved $893 billion through payment services last year — including digital wallets, payment apps and Zelle, a system owned by a consortium of banks — according to an estimate cited by the consumer bureau, and keep billions of dollars stored in those apps. Americans have been slower than consumers in other countries to adopt digital payments, but the pandemic sharply accelerated their use.
Nearly 56 million shoppers made an in-store purchase with Apple Pay — the most popular mobile payment service in the United States — this past April, according to the consumer bureau. Starbucks’ digital app and Google Pay, the next most widely used retail payment apps, trail behind Apple.
The consumer bureau already has enforcement powers over digital payment companies because it regulates electronic fund transfers, but adding supervisory oversight would significantly expand its visibility into the operations of the market’s largest operators.
The public can comment on the proposal until at least January. After that, the agency can move to finalize the regulations.