Apple Pay, Google Pay, other ‘Big Tech’ payments firms would face CFPB oversight from proposal

Larger nonbank companies that offer digital payment apps and wallets – including Apple Pay and Google Pay – would be subject to the same rules as banks, including examinations, under a rule proposed Tuesday by the federal consumer financial protection agency.

The proposal by the Consumer Financial Protection Bureau (CFPB) would require nonbank financial companies handling more than 5 million transactions each year to adhere to the same rules as large banks, credit unions, and other financial institutions already supervised by the bureau, the agency said.

According to a release by the agency, the proposal would subject larger nonbank digital consumer payment companies to the CFPB’s authority to conduct examinations. That includes, the agency said, requiring the firms to adhere to applicable funds transfer, privacy, and other consumer protection laws and to “play by the same rules as banks and credit unions,” which the agency said can “foster a level playing field with depository institutions.”

The agency contended, in its release, that “Big Tech” and other companies operating in consumer finance markets blur traditional lines that have separated banking and payments from commercial activities.

“The CFPB has found that this blurring can put consumers at risk, especially when the same traditional banking safeguards, like deposit insurance, may not apply,” the agency stated. “Despite their impact on consumer finance, Big Tech and other nonbank companies operating in the payments sphere do not receive the same regulatory scrutiny and oversight as banks and credit unions.”

The bureau said that, while it has enforcement authority over the companies, it has not previously had, inside many of these firms, examiners carefully scrutinizing their activities to ensure they are following the law and monitoring their executives.

CFPB Proposes New Federal Oversight of Big Tech Companies and Other Providers of Digital Wallets and Payment Apps