Better Markets filed a comment letter supporting the Consumer Financial Protection Bureau’s (CFPB’s) proposed rule on Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications.
Why It Matters. The CFPB’s proposal will help the agency keep pace with the growing use of digital payment applications offered by nonbanks and protect the wallets of the rising number of Americans using these technologies. Digital payment applications are becoming increasingly popular among consumers, with 4 in 5 Americans using one of these apps in 2020. As more consumer funds flow through this ecosystem, the risk of abuse increases. This trend also poses systemic risks as vast amounts of funds flow away from depository institutions and into the non-FDIC insured accounts associated with these payment applications.
What We Said. As authorized in the Dodd-Frank Act, this timely rule will define the group of large nonbank digital payment platforms subject to the CFPB’s oversight. That means the CFPB will be better equipped to examine these firms for compliance with financial consumer protection laws, and where appropriate, investigate and respond to violations. The Bureau’s supervision of these platforms will also provide insight into emerging business practices in this rapidly evolving industry, allowing risks and abuses to be identified and addressed as early as possible. And this rule will even help level the playing field between nonbanks and depository institutions, which the CFPB already supervises.
Bottom Line. In our comment letter, we express strong support for the CFPB’s proposal, highlighting its benefits for consumers and the financial system as a whole. We applaud the CFPB for moving forward with this reform.”
The full comment letter is available here.