Digital Transactions Authoritative, insightful and timely information for payments professionals
Sweeping regulation that would have impacted all major mobile-payment apps in the United States appears to be headed for the dustbin following action by the House of Representatives Wednesday to vote down a bill based on regulation from the Consumer Financial Protection Bureau.
The House action follows a Senate vote last month that also went against the proposal, which arose at the CFPB last fall in the waning days of the Biden administration. With both houses of Congress having voted down bills based on the CFPB rule—which formally is known as “Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications”—the action moves to the White House for President Trump’s signature.
This latest action against the rule “rolls back the regulatory overhang for payments,” says Scott Talbott, executive vice president at the Electronic Transactions Association, a Washington. D.C.-based trade group.
Some payments consultants celebrated the House vote, which unfolded 219-211 along party lines, with Republicans in favor of nixing the regulation. “We’re not going to see action to expand the CFPB’s remit under this [Trump] administration,” says Eric Grover, proprietor of the consultancy Intrepid Ventures, though he warns there could be further contention in the courts over the matter.
Consumer groups deplored the move by the House, with Consumers Union calling it a “major win for big tech at the expense of consumers.”
The 259-page payment-apps rule, which had been set to take effect 30 days after its publication in the Federal Register, would have applied to firms that process at least 50 million consumer transactions per year. Combined, the biggest firms covered by the regulation process more than 13 billion transactions annually, according to the CFPB’s estimates. The regulation would also have added enforcement capability to the CFPB’s remit in this area, where before its actions were limited to examinations.
Areas of supervision under the rule include privacy and surveillance, errors and fraud, and so-called “debanking,” or the interruptions consumers may sustain when app service is temporarily lost without notice. “Consumers have reported concerns to the CFPB about disruptions to their lives due to closures or freezes,” the CFPB noted in a release issued in November when the rule emerged.
The Trump administration in February fired the activist CFPB director Rohit Chopra. His replacements included two acting directors in succession before the nomination in February of Jonathan McKernan as permanent director.
