Daily Management Review

Big Tech Rejects US Consumer Watchdog's Proposals To Monitor Digital Wallets


Big Tech Rejects US Consumer Watchdog's Proposals To Monitor Digital Wallets
A US watchdog's plan to oversee businesses such as Apple and Alphabet's Google, which provide digital wallets and payment apps, risks impeding innovation and pushing some players out of the market, their advocacy organisation said on Monday.
The warnings from the Computer & Communications Industry Association (CCIA), whose members include Amazon, Facebook parent Meta, and X, formerly known as Twitter, are in response to a proposal made by the U.S. Consumer Financial Protection Bureau (CFPB) in November, which stated that tech giants' smartphone payments and wallet services competed with traditional payment methods but lacked the same consumer safeguards.
The CFPB's proposal, which has yet to be finalised, would subject such corporations to the same level of oversight as banks, with agency examiners evaluating compliance with laws governing unfair or deceptive tactics and privacy rights, as well as scrutinising executive conduct.
Officials expect the proposal, as worded, to cover 17 corporations responsible for 13 billion payments each year.
Some bank industry officials have reacted positively to the suggestion, arguing that companies that provide bank-like services should be regulated and directly overseen like banks.
However, Krisztian Katona, CCIA's head of regulatory policy, said in a statement reviewed by Reuters that the idea risked doing more harm than good, "as broad, overly burdensome or heavy-handed digital regulation could significantly hinder new startups in this industry."
In a response letter to the CFPB, which Reuters also received, CCIA stated that the CFPB's proposal failed to specify the specific dangers to consumers it aimed to address and incorrectly characterised non-bank digital providers and banks as direct rivals.
"Even if there are some instances where banks and nonbank entities compete, the reality of the market shows that there are more instances where their synergies help consumers, providing complementary services," the letter said.
In a separate comment letter issued on Monday, the Financial Technology Association, whose members include PayPal, which owns the Venmo service, and Block Inc, which operates Cash App, expressed similar worries.
It stated that existing regulations were sufficient and requested that the CFPB pause the rulemaking process.