A U.S. agency’s plan to supervise companies, such as Apple (NASDAQ:AAPL) and Alphabet’s (NASDAQ:GOOG) (GOOGL) Google which provide digital wallets and payment apps, risks curbing innovation and keeping some players out of the market, their trade association group said on Monday.
Computer & Communications Industry Association, or CCIA — whose members also include Amazon (AMZN), Facebook Meta Platforms (META) and X, formerly known as Twitter — was responding to proposal in November by the U.S. Consumer Financial Protection Bureau, or CFPB.
The CFPB had noted that the companie’ smartphone payments and wallets services rivaled traditional payment methods but lacked the same consumer safeguards, according to a report from Reuters.
“We would urge regulators to tailor new regulations to specific problems they want to fix as broad, overly burdensome or heavy-handed digital regulation could significantly hinder new startups in this industry, and harm U.S. innovation and economic growth,” said Krisztian Katona, CCIA Vice President of Global Competition and Regulatory Policy.
The CFPB proposal, which is not yet finalized, would hold the companies to the same kind of supervision currently imposed on banks, with agency reviewers inspecting compliance with laws on unfair or deceptive practices and privacy protections, and also scrutinizing executives’ behavior, the report noted.
Officials anticipate the proposal, would cover 17 companies responsible for 13 billion payments per year.
CFPB noted that the current regulatory proposal “fails to clearly identify a specific risk it seeks to address and merely identifies the possibility of ‘new risks’ from ‘new product offerings’ without explicitly stating what those risks might be.”
In a separate comment letter also released on Monday, the Financial Technology Association, or FTA, whose members include PayPal (PYPL), which owns Venmo, and Block (SQ), which operates Cash App, had similar concerns.
The FTA urged the CFPB to pause and reconsider its proposed rule defining larger participants in the digital consumer payments space, calling the rule overly broad and arguing that the Bureau had failed to properly define the market or identify specific risks to consumers which existing regulation does not already mitigate.