Non-financial institutions such as Apple and Google, which have developed digital payment systems for consumers, will be watched closely by the Consumer Financial Protection Bureau, or CFPB. The independent entity now states that these companies will be treated like any other bank. One of the reasons why the U.S. agency has targeted these multi-billion firms is the popularity of Apple Pay, which processes more than 50 million annual transactions in the country. The CFPB has announced that after 30 days, digital payment platforms will be subject to federal supervision. This likely means that whatever policy Apple introduces will be subject to a thorough investigation.
Apple Pay will be examined under federal consumer financial laws, with the CFPB highlighting certain risks and privacy concerns
The CFPB previously was able to ensure that mobile wallet services like Apple Pay and Google Pay complied with the law, but with the recent announcement below, these services will be viewed as a proper financial institution and will be subject to the same scrutiny. This will give the CFPB additional powers when it comes to dealing with policies that are deemed unfair by Apple, or tackle customer complaints.
“The Consumer Financial Protection Bureau (CFPB) today finalized a rule to supervise the largest nonbank companies offering digital funds transfer and payment wallet apps. The rule will help the CFPB to ensure that these companies – specifically those handling more than 50 million transactions per year – follow federal law just like large banks, credit unions, and other financial institutions already supervised by the CFPB. The CFPB estimates that the most widely used apps covered by the rule collectively process over 13 billion consumer payment transactions annually.”
CFPB Director Rohit Chopra has stated that digital payments have gone from novelty to necessity, and the agency’s involvement will help to protect consumer privacy, guard against fraud, and prevent illegal account closures. It is estimated that more than 60 percent of the U.S. population uses a mobile wallet, with Apple Pay being the most popular choice, meaning that it will be watched with a closer eye.
Given that there has not been an incident regarding Apple Pay that will paint the company’s image in a negative light, the Consumer Financial Protection Bureau will likely not have to make much effort, but it will still be watching the technology giant.
News Source: Consumer Financial Protection Bureau
