CFPB Will Treat Payment Apps Like Banks

The government’s banking watchdog plans to keep a closer eye on payment apps like Venmo and PayPal from now on.

The Consumer Financial Protection Bureau (CFPB), which regulates consumer financial services, finalized a rule Thursday allowing the agency to regularly inspect fintech companies just like it does with banks and credit unions. The rule will apply to the biggest players in the payment business, covering those that process 50 million transactions per day or more.

Under the new rule, CFPB inspectors can visit fintech companies, interview employees, and review documents to ensure they are following rules regarding consumer privacy, fraud, and closing customers’ accounts.

“Digital payments have gone from novelty to necessity, and our oversight must reflect this reality,”  CFPB Director Rohit Chopra said in a press release. “The rule will help to protect consumer privacy, guard against fraud, and prevent illegal account closures.” 

Major digital payment companies include Apple (AAPL), Google (GOOG, GOOGL), Amazon (AMZN), Meta (META), Block (SQ), and Paypal (PYPL).

The rule was announced last year, and the bureau made several changes from the original version, such as raising the supervision bar to 50 million daily transactions from 5 million and specifying that it would only cover transactions in U.S. dollars.

The rule is the latest action the CFPB has taken to bring payment apps under closer scrutiny as the services have grown in popularity in recent years. Last year, the bureau warned consumers that the FDIC does not insure money stored in payment apps like it would if the funds were in a bank account.