Fintech Nexus Newsletter (November 8, 2023): CFPB Tackles Big Tech, Hits Big(ish) Fintechs in the Process

For years, Big Tech has been edging in on financial services, largely without the regulatory constraints befitting a bank or credit union, despite operating similar services. 

But that may all come to an end soon if the CFPB’s latest proposal comes to pass. 

Yesterday, the CFPB proposed supervision of “larger nonbank companies that offer services like digital wallets and payment apps.” 

The rule also encompasses large fintechs like PayPal and CashApp, in fact, any tech company that handles more than five million transactions per year. A relatively small number when you consider PayPal processed around six billion transactions in one quarter this year. 

So basically, most larger payment fintechs and wallet providers, as well as Big Tech, will be affected by these rules. 

The aim is to “promote fair competition,” as usual, and speaks to the growing impact Big Tech and fintech have had on payments systems. 

Apparently, the rules are a response to the increased usage of digital wallets and payment providers, as well as the rising amounts of associated complaints. 

But not everyone is convinced. Chairman Patrick McHenry has deemed it a “step in the wrong direction,” while others believe it to be the product of incumbent pressure on the regulators to make it “a level playing field” on the regulatory front. 

What is clear is that the proposal has raised more questions than answers – I’m looking forward to reading the comments the CFPB receives as a result (which close on January 8, 2024). 


CFPB Moves to Expand Oversight of Digital Payment Apps

By Stacy Cowley   

A proposed rule would subject Google, Apple, PayPal and other digital wallet providers to the same scrutiny that banks face.


When Every Company is a Fintech Who Handles Compliance?
By Isabelle Castro Margaroli   
As Banking-as-a-Service develops into Embedded Finance, who holds the responsibility of compliance gets decidedly murky.
Pay by Bank: Streamlining Recurring Bill Payments
By Isabelle Castro Margaroli   
Mastercard and JP Morgan have partnered to bring open banking payments to billpaying. This is just the first development from the partnership.
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UPCOMING EVENTS The Most Important Policy Event of the Year! – Fintech Policy Summit
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  • USA: Oportun will lay off 18% of corporate staff, eliminate productsThe San Carlos, California, consumer lender said it’s “exploring strategic options” for its credit card portfolio, discontinuing its investment and retirement products and sunsetting a partnership with Sezzle in addition to embarking on a new round of job cuts.
  • Global: Banks look to fintechs to stave off threat from Big TechNearly half of all banks are looking to buy majority stakes in fintechs to fend off the threat from Big Tech companies muscling into the payments arena, according to an Economist Intelligence report.
  • USA: Goldman Moves to Unload GM Credit CardThe investment bank informed employees Tuesday of a process to find a new issuer as it retreats from consumer lending.
  • USA: Regions Bank partners with credit-building fintechThrough a new partnership with Self Financial, Regions customers can have their rent, cell phone and utility payments reported to the three major credit bureaus.
  • Global: India Has A Digital Infrastructure, America Needs OneThe Bill and Melinda Gates Foundation talk about the need for what they call a “digital public infrastructure” (DPI).
  • USA: What does a neobank for older folks look like?Most neobank’s focus on young consumers but neobank Charlie provides banking services to retirees and soon-to-be retirees. The firm allows consumers to access their Social Security benefit 3-5 days early, without any fees and also offers 3% earnings on deposits.
  • USA: Fintech Investors Are Still Funding: How B2B Fintech Unlocks CapitalThis decline in funding has led to a renewed focus on business-to-business (B2B) fintech, with female entrepreneurs spearheading a shift in market strategies to captur…

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