PROVIDENCE, R.I. (WPRI) — The Consumer Financial Protection Bureau (CFPB) is looking to impose stricter regulations for digital wallet and payment apps.
The CFPB proposed plans this week to supervise technology companies the same way it would financial institutions like banks and credit unions.
“We think if you’re going to be in the payments market and act like a bank, you should also be regulated like a bank,” said Shiva Nagaraj, an advisor to the CFPB’s director.
Large tech firms that operate in the consumer finance markets blur the lines between banking and payments from commercial activities, according to Nagaraj. The CFPB believes those blurred lines could put consumers at risk, since they don’t have traditional banking safeguards.
For example, the federal government insures up to $250,000 when someone’s money is in a bank account, however, digital apps may not have the same level of protection.
“There’s so much money at stake,” Nagaraj said. “Consumers are transferring trillions of dollars through the payment system each year, and we want to make sure they’re not vulnerable to fraud or data hacks or identity theft.”
“We are going to look into their practices on fraud control, data security, data privacy,” he added.
Nagaraj would not disclose the 17 companies that could be under the new supervision, but he gave examples of big players like Venmo, Cash App, Google Pay and Apple Pay.
“We think it’s especially important that we do have a sight line into these companies,” he said.
The CFPB is holding a 60-day public comment period, and the proposed new supervision could be finalized by next year.