CFPB Director Rohit Chopra emphasized, "Digital payments have gone from novelty to necessity and our oversight must reflect this reality. The rule will help to protect consumer privacy, guard against fraud, and prevent illegal account closures." This reflects the increasing reliance on digital payment systems and the need for regulatory oversight to ensure consumer protection.
The rule targets nonbank companies handling over 50 million USD transactions per year, ensuring that they follow federal laws like traditional financial institutions. This move acknowledges the mainstream nature of digital payments and the need for comprehensive regulation.
Although the CFPB will not disclose the identities of the seven companies meeting the transaction threshold, these companies collectively handle over 13 billion transactions annually, representing about 98% of the market. This highlights the substantial market presence of these players.
The frequency of the CFPB's examinations will depend on various factors such as transaction size and volume, market participant conduct, and existing state oversight, indicating a tailored approach to regulation based on risk assessment.
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