The Center has submitted comments to the Consumer Financial Protection Bureau on the proposed rule for supervising large non-bank participants in the general-use digital consumer payment application industry. The proposed regulation would cover several different types of consumer products, including peer-to-peer payment applications, stored-value wallets, pass-through wallets, neo-banks, cryptocurrency exchanges, and money transfer providers.
To prevent limiting consumer access to consumer payment applications and stymying innovation in the digital payments industry, the Center suggests several changes to the proposed rules.
- The CFPB should conduct a consumer harm risk assessment for each product type included in the proposed rule and publicize findings.
- The CFPB should alter the proposed definition of “large participant.” The proposed definition $5 million transaction threshold encompasses nearly every firm in the market. The CFPB should provide a more detailed justification for
this threshold and consider a tailored approach for different products and providers. - The CFPB should undertake individual rulemakings for each type of product included in the current proposed rule. Currently, the proposed rule encompasses many kinds of products with different consumer uses. Historically, the CFPB has adopted tailored rules for different markets and product providers.
- The CFPB should remove language nullifying the retailer carve-out for financial service data storage
and usage in the Consumer Financial Protection Act. The current language could lead to retailers avoiding data usage to escape CFPB supervision, potentially harming consumer benefits like anti-fraud technologies, personalized coupons, and targeted advertising.
