Tech giants reject US CFPB plans to supervise digital wallets

Digital wallet regulation: A proposal by the US Consumer Financial Protection Bureau (CFPB) to oversee digital wallet and payment app providers such as Apple, Google, and other tech giants has sparked concerns among industry stakeholders. The Computer & Communications Industry Association (CCIA), representing companies including Amazon, Meta, and X (formerly Twitter), warned that the regulatory plan could stifle innovation and create barriers to market entry.

The CFPB's draft proposal aims to subject these tech companies to regulatory oversight akin to that of traditional banks. This would entail compliance checks on issues such as consumer protection, privacy safeguards, and executive conduct. The initiative could potentially encompass 17 companies handling approximately 13 billion payments annually.

While some representatives from the banking sector have expressed support for such regulatory measures, asserting that bank-like services should face equivalent scrutiny, the CCIA and the Financial Technology Association have voiced reservations. Krisztian Katona, the CCIA's Head of Regulatory Policy, cautioned against overly stringent regulation, emphasizing the potential adverse impact on emerging startups within the industry.

Lack of specificity

In a statement and subsequent comment letter to the CFPB, the CCIA criticised the proposal for its lack of specificity regarding consumer risks and its misconstrued perception of non-bank digital providers and banks as direct rivals. The association highlighted the symbiotic relationship between banks and non-bank entities, suggesting that their collaborative efforts often benefit consumers through complementary services.

Similarly, the Financial Technology Association, representing members like PayPal's Venmo and Block Inc.'s Cash App, echoed these concerns. The association contended that existing regulatory frameworks suffice and advocated for the suspension of the CFPB's rulemaking initiative, underscoring the potential repercussions on innovation and market dynamics.

(With Reuters inputs)