Google and Apple Payment Apps to Face Bank-Like Regulation in the US

In the United States, the Consumer Financial Protection Bureau (CFPB) has proposed new rules that would subject payment apps like Meta Platforms Inc., Apple Inc., Alphabet Inc., and other non-banking companies to similar regulations as traditional banks. The purpose of these rules is to treat non-banking companies that handle annual transfers of more than 5 million payments similarly to banks, credit unions, and previously regulated financial institutions.

Under these proposed rules, the CFPB will monitor and regulate the financial transactions of non-banking companies that provide payment services. This regulation will ensure that these companies conduct their payment processing services within the bounds of appropriate, transparent, and non-deceptive practices. The CFPB will have the authority to take action against non-banking companies if they engage in unfair, deceptive, or abusive practices related to the handling of funds.

In recent years, the use of digital payment services like Venmo and Cash App by PayPal Holdings Inc. and Square Inc. has significantly increased as consumers have increasingly used their smartphones and other electronic devices to store and transfer money. The CFPB’s proposed regulation will impact approximately 17 companies that represent 88% of the payment space market and process around $13 trillion in payments each year.