In a filing on Tuesday, the Consumer Finance Protection Bureau (CFPB) suggested that huge digital companies be subject to the same laws as banks. If PayPal and Apple provide bank-like financial services like credit cards, savings accounts, and payments, the CFPB wants to regulate them in the same way that it regulates banks.
The organisation putting up these laws was established in 2011 in the wake of the 2008 financial crisis. Its mandate is to safeguard US consumers against impending financial dangers and to maintain competition, fairness, and transparency—three areas in which technology falls short. Digital wallets are what the CFPB considers to be the next area of interest. Although Apple Wallet, PayPal, and Venmo receive billions of public cash in the United States, they are not subject to the same regulations as the financial industry.
The distinction between banking and ordinary business activity is blurred by big tech, according to Chopra, who last month made a speech-related commitment to challenge big tech. Chopra expressed concern that American applications may emulate the success of WeChat, a popular Chinese app, stating that large tech companies have a strong incentive to monitor every part of a user’s transactions. That appears to be the objective, though, at Elon Musk’s X.
This month, Apple Pay Later went national, giving credit to any iPhone owner. This project is distinct for Apple as it is financed by Apple Finance LLC, a subsidiary, rather by Goldman Sachs, which finances the Apple Card and Apple Savings Account.
Because money stored in Venmo, CashApp, or PayPal isn’t protected up to $250,000 like bank accounts are, the CFPB cautioned Americans in June not to keep money in these services. Money kept on large digital platforms is not covered in the event of a financial catastrophe or business bankruptcy.
Although the idea has not yet become legislation, there is now a comment process that ends on January 8, 2024.