Digital Pay Rule Ranks Low for GOP Repeal as Big Tech Eyes Suit
A Consumer Financial Protection Bureau rule bringing
The CFPB’s “larger participant” rule calls for digital payment companies that process more than 50 million transactions each year to be regulated more like big banks. It would cover the seven largest companies in the market and around 98% of digital transactions, the agency said.
The rule, finalized Thursday, has the support of banks who want their big tech competitors brought under the same supervisory umbrella. It’s also backed by consumer advocates who say the rule fills a regulatory vacuum for popular apps such as Apple Pay and Google Pay.
Trade groups representing digital payment providers have already indicated they plan to sue over the rule, and some GOP lawmakers quickly raised concerns about a CFPB “power grab.”
But with a narrow window to repeal Biden-era regulations amid an aggressive agenda that includes negotiating a sweeping tax package—and a crypto-friendly change in the final rule—Republican opponents in Congress may sit back and let industry take the lead in challenging it, despite their new 2025 majorities.
A CFPB led by a Trump appointee may also simply choose not to enforce the rule.
“The Trump Administration is likely to focus on regulations that broadly impact financial institutions and not on administrative procedures for large technology companies,” said Peter Dugas, executive director at Capco, a financial services consulting firm.
Biggest Players
Along with Apple and Google, the CFPB’s final rule will cover the largest digital wallet operators and other payment platforms, such as
The agency originally proposed setting a 5 million annual transaction threshold for supervision, potentially roping in cryptocurrency wallets and other smaller operators. The final rule’s 50 million threshold, limited to transactions conducted in US dollars, exempts those companies.
The Trump administration and the incoming Congress are expected to tackle a broad crypto regulatory agenda in the coming session.
The CFPB said the rule is intended to prevent elder fraud and improve data security at big digital payment companies. The agency also said its examiners will look to prevent unnecessary debanking where customers are locked out of making payments without explanation.
CFPB Director Rohit Chopra has raised similar concerns about digital payment and other financial companies blocking customer access based on political or other activities that don’t violate federal or state laws.
Overall, the rule should fill an existing void, said Catherine Brennan, a Hudson Cook LLP partner whose practice focuses on financial technology.
“This type of a rule is long overdue given how widespread these kinds of applications are and how many people are using them regularly,” she said.
The CFPB can already bring enforcement actions against the covered companies for improper conduct, but those moves are limited to looking at past activity, said Adam Rust, the director of financial services at the Consumer Federation of America.
“Enforcement penalizes wrongdoing, but supervision prevents problems from happening in the first place,” he said.
Legal Threat
Trade associations representing tech companies subject to the CFPB’s supervisory powers said the agency’s final rule was unnecessary and potentially illegal.
The Financial Technology Association, representing members including Block and PayPal, urged the CFPB to withdraw the rule.
And the Chamber of Progress, a tech trade group that lists Apple and Google as partners, said the rule wouldn’t survive.
“This rule is unlikely to withstand legal challenges or the impending administration change,” Kyle Bligen, the Chamber of Progress’ director of financial policy, said in a statement.
Lower Priority
Congress watchers say action from lawmakers to repeal the rule using the Congressional Review Act may not be in the cards.
The CRA allows Congress to repeal a regulation through a simple-majority vote in both houses and the president’s signature.
But that takes time, and there are other regulatory priorities that are likely to come first, said Aaron Cutler, a partner at Hogan Lovells LLP who served as a top aide to former Republican House Majority Leader Eric Cantor (Va.).
“With a long list of regulations from the Biden Administration on the GOP’s CRA agenda for the next Congress, the biggest hurdle might be getting this rule to the top of the queue because each CRA takes up valuable floor time,” he said.
That said, Republicans—including incoming Senate Banking Committee Chairman Tim Scott (R-S.C.)—have urged the CFPB and other regulators to hold off on any rulemaking until President-elect Trump gets his team in place at the agencies.
A Trump-appointed CFPB director will have other priorities, such as repealing the agency’s credit card late fee rule and other regulations and guidance, said Isaac Boltansky, the director of policy research at investment bank BTIG LLC.
“Why not let it play out in the courts while they work on other priorities?” he said.
A Trump-appointed director could simply let the larger participant rule linger without taking any action, said Mercedes Tunstall, a partner at Cadwalader Wickersham & Taft LLP focused on consumer financial services and fintechs.
“It could be that the Republican appointee to the CFPB, the director, could just say this is not a priority to supervise,” she said.
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