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Big Tech Group Opposes Proposed CFPB Digital Wallet Rules

Consumer Financial Protection Bureau

A tech lobbying group is pushing back against proposed regulations for digital wallet providers.

The Computer & Communications Industry Association (CCIA) — whose members include Amazon and Meta — issued a response Monday (Jan. 8) to proposed Consumer Financial Protection Bureau (CFPB) rules for larger nonbank companies that offer services like digital wallets and payment apps.

The CFPB proposal, announced in November, would bring nonbank financial companies, particularly those handling more than 5 million transactions annually, under the same regulatory umbrella as large banks, credit unions and other financial institutions supervised by the CFPB.

“Payment systems are critical infrastructure for our economy. These activities used to be conducted almost exclusively by supervised banks,” CFPB Director Rohit Chopra said then.

The new regulations, he added, “would crack down on one avenue for regulatory arbitrage by ensuring large technology firms and other nonbank payments companies are subjected to appropriate oversight.”

However, the CCIA said in a filing with the agency that the proposal does not identify a specific risk, but rather says that new risks are possible in the industry without saying what they are.

“It’s worth keeping in mind as the CFPB considers further regulations on digital services that consumer feedback seems to point towards a general satisfaction with payment services, which suggests the absence of a market failure in the sector,” Krisztian Katona, the CCIA’s vice president of global competition and regulatory policy, said in a news release.

“We would urge regulators to tailor new regulations to specific problems they want to fix as broad, overly burdensome or heavy-handed digital regulation could significantly hinder new startups in this industry, and harm U.S. innovation and economic growth.”

The proposal has also been criticized by U.S. Rep. Patrick McHenry (R-N.C.), head of the House Financial Services Committee, who said the rules would “only limit nonbanks’ ability to offer products and services consumers and small businesses rely on — eliminating choice and competition in our payments system.”

As PYMNTS wrote soon after the CFPB unveiled its proposal, the scope of the regulator’s plan would add 17 new entities to its purview, companies that facilitated about 12.8 billion transactions in 2021, with an estimated value of about $1.7 trillion, covering 88% of known transactions in the nonbank sector.

Research from PYMNTS Intelligence and Nuvei has also found that mobile wallet usage for brick-and-mortar purchases had risen by as much as 9% year on year — and was the most popular alternate purchasing method for American consumers, used by 59% of those shoppers.