CFPB Proposes Supervision of Digital Payment Service Providers

The CFPB proposed a regulatory framework applicable to nonbanks that offer digital payment applications and money transfer services for "personal, household, or family purposes."

The CFPB said that the proposed rules are intended "to define a market for general-use digital consumer payment applications." Under the proposal, a nonbank would be subject to regulation if it (i) offered general-use digital consumer payment applications with an annual volume of at least five million consumer payment transactions and (ii) is not a "small business concern" as defined in the Small Business Administration's size standards.

The CFPB stated that it has the authority to regulate such entities pursuant to 12 U.S.C. 5514, which provides it supervisory authority over "larger participant[s] of a market for consumer financial products or services."

Comments on the proposal must be submitted by January 8, 2024.