A proposal by the Consumer Financial Protection Bureau to supervise big tech companies’ payment and digital wallet services has drawn criticism from industry trade groups as the deadline for offering public comment looms.
Among those groups are the Electronic Transactions Association, the Financial Technology Association and the Crypto Council for Innovation, all of which have called for an extension of the comment period. As of Wednesday, only 11 comments had been submitted.
A CFPB spokesperson said the current comment deadline is Jan. 8 and declined to comment further.
The proposed rule, issued by the bureau in early November, would subject Google, Apple and other big tech providers of digital wallets and payments services to laws that banks must abide by in offering such services.
The CFPB has expressed concern with non-bank companies handling digital payments services for consumers as tools, such as peer-to-peer apps, have grown more popular, according to a CFPB press release.
The CFPB aims to protect consumers and their money, as well as level the competitive playing field. The new oversight would apply to companies that handle five million, or more, digital payment transactions annually, the CFPB said.
Eight fintech trade groups, including the ETA, FTA and the American Fintech Council, submitted a letter Dec. 14 that suggested the lack of comments on the proposed rule is due to the “numerous complex issues” the proposal introduces. “Nonbank financial institutions are continuing to review and analyze to provide the Bureau with thoughtful, substantive comments on the Proposal,” they said in the letter.
The proposal’s inconsistencies leave it unclear which product markets the rule would include and exclude, “leaving substantial confusion about the identity of the 17 companies the rule says are covered,” the groups said in the letter. The CFPB has declined to provide a list of the companies.
The proposal also doesn’t provide “sufficient cost-benefit analysis of the potential impacts of such a rule on these distinct product markets,” the letter added. The trade groups asked the bureau to extend the proposed rule’s comment period by 30 days.
Another trade group, the Crypto Council for Innovation, also called on the CFPB to extend the comment period, citing a need for more time to consider the proposal in light of its novelty and complexity with respect to digital assets.
In a letter submitted Dec. 26, the Crypto Council said the CFPB’s proposal to broadly include digital asset activity under its exam authority “departs from its historical practices and is inconsistent with the plain language of the Consumer Financial Protection Act.”
It also raises questions about the applicability of broader CFPB payments rules to digital assets and digital asset wallet providers, “creating ambiguity as to what regulations apply to the digital asset market and the CFPB’s supervisory expectations,” the CCI’s letter said.
The Electronic Payments Core of Knowledge, or EPCOR, a not-for-profit payments association, also weighed in via a Dec. 19 letter. That group’s members — which include banks and credit unions, companies providing products and services to financial institutions, and businesses that use payment systems — generally support bringing larger non-bank companies under CFPB supervision with consumer protection in mind, the letter said.
However, “members were neither entirely in agreement with, nor completely against the adoption of any of the proposed market definitions,” related to wallet functionality and annual volume criterion, the letter noted.
A Google spokesperson declined to comment on the proposal. Spokespeople for Apple, Block, PayPal, Samsung and Zelle parent company Early Warning Services didn’t immediately respond to requests for comment.
