CFPB Finalizes Rule on Popular Digital Payment Apps to Protect Personal Data, Reduce Fraud, and Stop Illegal “Debanking”

The Consumer Financial Protection Bureau (CFPB) has finalized a rule to supervise the largest non-bank 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.

Digital payment apps have become a cornerstone of daily commerce, rivaling traditional payment methods like credit cards and debit cards for both online and in-store purchases.

Some of these apps are owned by the world’s largest technology conglomerates.

These services have gained particularly strong adoption among middle and lower-income consumers, who now use payment apps for daily spending and funds transfers at rates that rival or exceed the use of cash.

What began as a convenient alternative to cash has evolved into a critical financial tool, processing over a trillion dollars in payments between consumers and their friends, families, and businesses.

While banks and credit unions offering consumer payment services are subject to CFPB supervisory examinations, many of these very large technology firms handling billions of transactions are not.

The CFPB has closely observed developments in this emerging market, including by monitoring consumer complaints and launching an inquiry into “Big Tech” and peer-to-peer platforms offering popular payment apps.

The final rule will enable the CFPB to supervise companies in key areas including privacy and surveillance, errors and fraud, and debanking.

While the CFPB has always had enforcement authority over these companies, the rule gives the CFPB the authority to conduct proactive examinations to ensure companies are complying with the law in these and other areas.

Supervision can prevent harm by detecting problems early. Supervision also is an important tool for the CFPB to assess risks that can emerge rapidly in this market, including from outages and other issues that could lead to millions of consumers losing access to their funds.

The rule will be effective 30 days after publication in the Federal Register.