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Can the payments industry stop worrying about federal mobile-wallet regulation now?
Let’s hope that’s the case now that sweeping regulation that would have impacted all major mobile-payment apps in the United States appears to be headed for oblivion. That’s the state of affairs after the U.S. House of Representatives last month voted down a bill based on regulation from the Biden-era Consumer Financial Protection Bureau. The House action followed a Senate vote in March that also went against the proposal, which arose at the CFPB last fall in the waning days of the Biden administration.
This latest action against the rule “rolls back the regulatory overhang for payments,” Scott Talbott, executive vice president at the Electronic Transactions Association, a Washington. D.C.-based trade group, told us. That’s another way of saying the industry is heaving a deep sigh of relief.
So what was this pernicious proposal all about? The rule these bills tried to codify was the CFPB’s 259-page payment-apps rule, which the agency first proposed in November 2023. It 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 proposed rule included 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 when the rule emerged.
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”—it now appears likely that digital-wallet development can proceed unhindered by federal nannies.
Indeed, payments players and consultants celebrated the House vote, which unfolded 219-211 along party lines, with Republicans in the majority. “We’re not going to see action to expand the CFPB’s remit under this [Trump] administration,” payments consultant Eric Grover told us after the House vote, though he warns there could be further contention in the courts over the matter.
If that’s the case, let it come. At the very least, some very pernicious rulemaking has been deep-sixed, and mobile-wallet technology can proceed unhindered by overactive government agencies. If these apps fail, let it be because they couldn’t properly serve consumers and businesses—not because they offended some bureaucrat’s sense of propriety.
—John Stewart, Editor john@digitaltransactions.net
