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Apple Pay, Cash App, and other digital wallets will soon be regulated similarly to banks due to a new rule from the U.S. Consumer Financial Protection Bureau (CFPB).
The regulation, finalised on November 21, 2024, targets nonbank firms that process over 50 million transactions annually, including major players like Apple, Google, PayPal, and Venmo. The CFPB aims to ensure these digital payment services comply with the same laws that govern traditional financial institutions.
The new oversight is intended to protect consumer privacy, reduce fraud, and prevent illegal account closures.
“Digital payments have gone from novelty to necessity and our oversight must reflect this reality,” stated CFPB Director Rohit Chopra. This rule reflects the growing reliance on digital payment methods, which have become essential for many consumers, particularly among lower-income demographics.
The CFPB estimates that the most popular apps covered by this rule collectively handle more than 13 billion consumer payment transactions each year. The regulatory change comes as digital wallets have increasingly become a substitute for traditional banking services, with many users storing funds and making daily purchases through these applications.
Previously, the CFPB had proposed a broader scope that would include any company processing at least 5 million transactions annually. However, this threshold was raised to 50 million in the final rule.
As a result, only seven non-bank entities now fall under this enhanced scrutiny. The CFPB will conduct “proactive examinations” of these companies to ensure compliance with federal consumer financial laws. These examinations may involve reviewing company records and operations, interviewing personnel, and assessing compliance policies.
The regulation also addresses concerns over data privacy and fraudulent activities. The CFPB noted that some digital payment apps have been found to shift the responsibility for handling disputes onto banks and credit unions rather than managing them internally. This oversight aims to hold these companies accountable and make sure they provide adequate protections for their users. This new rule is set to take effect 30 days after its publication in the Federal Register.