Republican Representatives Urge CFPB to Revisit Proposed Payment App Rule

Recently, three Republican members of the U.S. House of Representatives’ Financial Services Committee, Patrick McHenry, Mike Flood, and French Hill, sent a joint letter to the Consumer Financial Protection Bureau (CFPB or Bureau) urging the agency to reopen the comment period and reconsider its November 2023 proposed rule regarding digital consumer payment applications. 

As discussed here, the Bureau is seeking to amend existing regulations by adding a new section to define larger participants that offer digital wallets, payment applications, and other services to fall within the CFPB’s supervisory scope. The Congressmen urge the CFPB to open the comment period on the proposed rule for an additional 60 days arguing that “[a]s it currently stands, this rule would introduce more regulatory uncertainty into the payment industry, particularly with respect to third-party service providers and digital asset companies.”

Specifically, under the proposed rule the CFPB seeks to supervise large nonbanks that provide peer-to-peer (P2P) payments, funds transfers, or wallet functionalities through a digital payment application. The proposed rule would subject companies that offer one or more of the covered activities to the CFPB’s supervisory authority, which would allow the CFPB to conduct examinations and assess compliance with all federal consumer financial protection laws and regulations enforced by the CFPB, not merely the ones relating to digital payments.