The Consumer Financial Protection Bureau (CFPB) proposed a rule to subject large nonbank digital wallet and payment app providers to the same supervisory process as banks. This move is primarily driven by the growth of digital payment apps, often associated with Big Tech, which were previously exempt from CFPB examinations.
The rule targets nonbank financial companies handling over 5 million transactions annually, ensuring they adhere to the same regulations as banks and other financial institutions. The CFPB's request for comments is open until Jan. 8, 2024, with mostly positive responses from fintech and financial sectors.
The proposal aims to enhance consumer protection and consistency in the industry, addressing concerns about Big Tech's influence on financial products and consumer privacy.
It also seeks to prevent conflicts of interest, promote fair competition and restore regulatory parity in the marketplace. CFPB Director Rohit Chopra emphasized the importance of regulating digital payment systems to protect consumers, particularly those with lower incomes.
The Credit Card Competition Act (CCCA) has garnered support from various merchants and their lobbying groups, such as the National Retail Federation and the National Association of Convenience Stores.
However, the Small Business Payments Alliance, representing small business owners and tradespeople, opposes the legislation. They argue that credit card payments offer essential benefits to small businesses, including customer convenience, transaction security and rewards that can be reinvested.
The SBPA contends that the CCCA poses a direct threat to the electronic payments system, as it mandates government-regulated processing network choices for banks, disregarding security and quality concerns. The CCCA, authored by Senator Dick Durbin, aims to increase network competition to reduce interchange fees and lower consumer prices.
However, past experience with debit interchange regulation showed mixed results for merchants and little to no savings passed on to consumers.
The United States is seeing a surge in pay-by-bank partnerships, mirroring the success of this open banking solution in Europe, Asia and the Middle East. Open banking collaborations aim to provide consumers with secure, frictionless bill payment options.
Proponents highlight several advantages, including enhanced checkout experiences with secure authentication methods and direct debit payments that avoid extra fees and high interest charges. JPMorgan Payments, in partnership with Mastercard, recently introduced its pay-by-bank solution, which is being piloted by Verizon.
This solution utilizes traditional ACH rails and allows merchants to accept payments directly from customer bank accounts, streamlining payment processes. Link Money and Bold Commerce also joined forces to enable U.S. enterprises to offer pay-by-bank on ecommerce platforms, reducing payment card fees and addressing fraud concerns. Industry experts predict continued growth of open banking in the United States, with 2024 poised to be a significant year for account-to-account payments.
An estimated 182 million Americans were expected to shop in-store and online during the Thanksgiving Day to Cyber Monday weekend, according to a survey by the National Retail Federation and Prosper Insights & Analytics. This marks a significant increase of 15.7 million shoppers compared to the previous year. The survey revealed that 74 percent of holiday shoppers planned to hit stores during this period, up from 69 percent pre-pandemic in 2019. Black Friday remained the most popular shopping day, with 72 percent planning to shop both in stores and online.
Despite early holiday shopping, the Thanksgiving to Cyber Monday period was expected to be among the busiest of the year. The NRF projected holiday spending would grow by 3 to 4 percent over 2022, totaling between $957.3 billion and $966.6 billion.
However, NICE Actimize forecasted a surge in ecommerce fraud, expecting it to reach $48 billion in 2023, up from $41 billion in 2022. 
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