CFPB Proposes to Supervise Larger Participants in the Market for Digital Payment Applications: Three Things to Know

On November 7, 2023, the Consumer Financial Protection Bureau issued a notice of proposed rulemaking that would extend the CFPB’s supervisory authority to larger nonbank providers of general-use digital consumer payment applications. The CFPB acknowledged the widespread use among consumers and commercial firms of digital applications for consumer retail payment transactions, including sending money to friends and family. The Proposed Rule is intended in part to foster a level playing field between banks and larger non-bank financial institutions that provide consumer payment services. The CFPB currently has regulatory and enforcement authority over both banks and non-bank financial institutions that provide payment services, and the Proposed Rule is intended to enable CFPB examiners to conduct examinations of larger non-bank providers of payment services' compliance with consumer financial services requirements, including the prohibition on unfair, deceptive, and abusive acts or practices, funds transfer requirements, and privacy requirements. The proposed rule includes a reminder that nonbank covered persons are already subject to the CFPB's regulatory and enforcement authority. Comments are due to the CFPB by the later of January 8, 2024, or 30 days after publication of the Proposed Rule in the Federal Register.