For years, there were usually less than a handful of cases at the Consumer Financial Protection Bureau that involved payments. That is rapidly becoming a thing of the past.
CFPB Director Rohit Chopra has made payments a top priority, and is looking closely at impacts on competition and the impact of rapid payments innovation on consumers, according to Thomas Ward, a partner at Sidley Austin in Washington who was an enforcement director at the bureau from February 2021 to May 2021.
"Payments has always been a sleepy space at the bureau," Ward said during a panel at American Banker's Payments Forum in Phoenix this week, noting the Biden administration and CFPB are taking a more active approach as technology companies that provide payments become larger.
Almost immediately after becoming CFPB chief in October 2021,
The technology companies mentioned in the CFPB order are leading the trend toward financial "
Regulators also frequently scrutinize Apple's payment policies, which require developers to use Apple's internal payment system, along with fees of up to 30% for developers on its platform. Apple also controls access to the secure element on the iPhone for contactless payments.
Apple has faced lawsuits over these policies, as well as antitrust investigations in a
The CFPB is also investigating fintechs that offer
"The bureau is concerned there is a payments market that's growing outside of its purview," Ward said. "Payments regulators are no longer sleeping."
What's particularly interesting, according to Ward, is the CFPB mentioned two Chinese payment apps, Alipay and WeChat Pay, saying the apps are "deeply embedded" into the lives of Chinese citizens, covering payments, messaging and e-commerce. This mix of products and scale give little choice to consumers but to use the two apps.
"The CFPB is concerned the same sort of thing may happen here in the U.S.," Ward said.
Russia's invasion of Ukraine has also created new compliance challenges for financial services and payment providers. Hundreds of banks and payment firms have discontinued operations in Russia in the months since the war began, and there is
"Sanctions enforcement is now more of a priority for the government," said Sujit Raman, general counsel of TRM Labs, which supports risk management and compliance for financial institutions and cryptocurrency businesses.
Raman, a former U.S. associate deputy attorney general at the Justice Department, said the department has formed two task forces to make sure payment companies ensure their gateways are not being accessed by sanctioned entities.
"They are encouraging an awareness of who is transacting or who is getting paid," Raman said.