The Computer & Communications Industry Association (CCIA), representing tech giants like Apple, Google, Amazon, Meta (Facebook's parent company), and X (previously known as Twitter), criticized the US Consumer Financial Protection Bureau (CFPB) proposal aimed at overseeing digital wallet and payment app providers.

The CFPB suggested subjecting these tech companies to bank-like regulations, including supervision by agency examiners, citing concerns about consumer safeguards and compliance with financial laws and privacy protections.

Industry Leaders Voice Concerns Over Proposed Financial Regulations

CCIA's head of regulatory policy, Krisztian Katona, warned that such oversight might impede startups in the industry.

In a comment letter to the CFPB, the lobby group noted the lack of specific identified consumer risks and stressed the collaborative role of non-bank digital providers and banks in serving consumers' needs. The Financial Technology Association, including PayPal (owner of Venmo) and Block Inc (operator of Cash App), echoed these concerns, suggesting existing regulations were adequate and calling for suspending the CFPB's rulemaking process.

They argued that the proposed heavy-handed digital regulation might stifle innovation and didn't adequately acknowledge the collaborative nature between banks and non-bank entities in serving consumers' interests.

Meanwhile, the House Financial Services Committee chairman, Representative Patrick McHenry of North Carolina, acknowledged specific concerns regarding the proposal's potential effects, he argued that by limiting non-banks ability to deliver vital products and services relied on by both consumers and small firms alike, it risked reducing access to necessities commonly utilized by many.

He warned that such limitations could reduce choices and competition within the payments system.

As revealed by PYMNTS, the CFPB's plan aims to oversee 17 new entities involved in approximately 12.8 billion transactions in 2021, totaling an estimated value of $1.7 trillion. These companies represent about 88% of known transactions within the non-bank sector, signaling a significant regulatory expansion by the CFPB.

The research conducted by PYMNTS Intelligence and Nuvei highlights the increasing trend of using mobile wallets for in-store purchases, with a noteworthy 9% increase observed year over year. A significant shift in customer payment preferences is evident in the fact that 59% of American consumers now rank mobile wallets as their preferred alternative purchasing method.

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New Jersey Officials Seek CFPB Aid in Strengthening Digital Payment Oversight

Officials highlight challenges consumers face when seeking assistance with digital payment app issues, citing difficulty in receiving prompt customer service responses. They anticipate increased oversight from the CFPB will bolster consumer protection regulations in New Jersey.

The Department of Banking and Insurance monitors non-bank digital platforms but lacks comprehensive oversight.

This move aims to equip New Jersey regulators with enhanced tools and insights through CFPB examinations to curb unfair, deceptive, or abusive practices in the digital payment market. This action reflects prior engagements; in 2021, New Jersey joined other states in a collective comment letter initiated by Oregon and Idaho, addressing the CFPB's scrutiny of big tech payment platforms.

This collaboration involves states such as California, New York, and the District of Columbia, signaling a widespread effort towards ensuring consumer protection in digital payments.

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