The Consumer Financial Protection Bureau (CFPB) reportedly proposed regulating payments and smartphone wallets offered by tech giants like Apple Inc (NASDAQ: AAPL) and Google. The strategic step is taken by CFPB Director Rohit Chopra who is known for his focus on big Tech firm’s privacy and competition issues.
Tech giants in CFPB crosshairs
According to the report, the proposed rules argue that payment services provided by the tech gainst are now rival to traditional banking in scale and scope. It is being noted that this is providing a competitive edge to traditional lenders. These players have been looking for a regulatory ground with capital hikes, card fee caps, and stricter fair lending standards.
It added that around 17 companies have been affected including Paypal, Apple, and Google by this regulation. It is expected that this move will bring more stringent supervision by authority. As per the rules, it is now required to comply with CFPB regulations on privacy, executives’ conduct, and prevention of unfair and deceptive practices.
It is important to note that this will be the first time that Apple and Google will be subject to CFPB oversight. Experts suggest that authorities have taken this move as the banking industry pressed for regulatory pressure. However, it seems that CFPB’s increased scrutiny aims to prevent potential monetization of customer data by tech companies. It also addresses concerns about compromised user privacy.
Potential impact on financial landscape
Under the proposed rule. the tech giants that are reliant on banks to process payments might have to face additional fees for these transactions. The CFPB showed its concern and reflected that without regulatory scrutiny these companies could leverage their dominance in consumer payments in order to expand into lending and card issuing.
Industry observers have argued that this move will enhance competition in the financial marketplace. However, this regulatory shift may now limit how tech gainst will handle consumer data as it also highlights their growing influence in the financial sector.