The proposal would subject certain large non-bank companies offering wallet and payment services to federal regulatory oversight on par with banks and credit unions.

By Jenny Cieplak, Parag Patel, Barrie VanBrackle, and Deric Behar

On November 7, 2023, the Consumer Financial Protection Bureau (CFPB) proposed a rule, Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications (the Proposal), to supervise large providers of digital wallets and payment apps. The Proposal aims to ensure that US-based non-bank financial service companies providing digital wallets and payment apps will be subject to the same federal supervisory rules as banks, credit unions, and other financial institutions that the CFPB already supervises.

According to the CFPB, fintech companies and other firms offering novel products and services in the consumer finance space have “blur[ed] the traditional lines of banking and commerce.” The Proposal therefore aims to “enable the CFPB to monitor for new risks to both consumers and the market,” and to “promote fair competition” through consistent enforcement between depository and non-depository institutions.

The move becomes effective on October 1, 2023, with the Supreme Court soon to decide on the agency’s rule-writing authority.

By Barrie VanBrackle, Marifiel Gonzalez, and Deric Behar

On February 1, 2023, the Consumer Financial Protection Bureau (CFPB) proposed a rule (the Proposal) to amend Regulation Z, which implements the Truth in Lending Act (the Act) to limit credit card late fees. The CFPB received comments before its May 3, 2023 deadline, and it announced that the proposed rule will go into effect on October 1, 2023.

Absent further challenges as described below, credit card issuers should be ready to implement controls to comply with the Proposal.

The Act aims to modernize and streamline state regulation of money transmitters while promoting innovation and consumer protection.

By Parag Patel, Mik Bushinski, and Deric Behar

More than a dozen US states have enacted the Money Transmission Modernization Act (MTMA) in whole or in part, while several others have introduced bills to implement some or all of the model legislation that seeks to establish a uniform set of regulatory standards applicable to money transmitters at the state level.

The Conference of State Bank Supervisors (CSBS), a trade association of state financial services regulators that regulate money transmitters (among other providers of financial services), finalized the MTMA in August 2021 after receiving feedback from industry stakeholders.

The MTMA aims to reduce regulatory burden for money transmitters that operate in many states, streamline regulatory efforts and coordination among state regulators of money transmitters, encourage innovation by money transmitters, and protect small businesses and consumers that rely on money transmitters. The potential impact from more uniform and streamlined licensing across states is significant: in 2021, money transmitters handled $4.9 trillion, of which 99.8% was transmitted by companies licensed in multiple states, according to the CSBS.

New laws implement regulatory standards and licensing requirements for fintechs seeking to improve employee access to wages.

By Parag Patel, Mik Bushinski, and Deric Behar

On June 13, 2023, Nevada enacted a law that regulates earned wage access (EWA) services provided to state residents. Missouri followed by enacting an EWA law on July 7, 2023 that shares many similarities with Nevada’s. The new EWA laws make Nevada and Missouri the first two states in the US to establish statutory frameworks designed to regulate EWA services.

EWA services enable a consumer to receive earned employment income prior to a scheduled payday. They ideally provide an alternative to high-cost forms of credit, such as payday loans, although some consumer advocacy groups have warned of fees and other problematic aspects with certain EWA services.

To date, the principal providers of EWA services are fintechs, some of which are new entrants and some of which have been in the EWA business for several years.

Importantly, the EWA laws in both states exempt EWA services from their respective state laws that regulate loans and money transmission. EWA service providers in Nevada or Missouri would therefore not be regulated as a lender or money transmitter in connection with the EWA services they provide to residents of those states.

Consumers and businesses stand to benefit from rapid access to funds at any time when routed through participating financial institutions.

By Parag Patel, Barrie VanBrackle, Mik Bushinski, and Deric Behar

On July 20, 2023, the Federal Reserve announced the long-awaited launch of its real-time payment service, FedNow. The new service enables consumers and businesses to send and receive payments instantly on a 24/7/365 basis via participating financial institutions. It is available to financial institutions eligible to hold accounts at Federal Reserve Banks, and participating depository institutions may appoint a service provider or agent to submit FedNow payment instructions on their behalf. FedNow will initially only support domestic payments between US depository institutions.

FedNow can benefit consumers, businesses, and financial institutions with the promise of more flexibility and transparency of payments, improved cash flow and money management, and new customer service solutions.

Latham’s payments specialists examine the proposed new EU payments package.

By Christian McDermott, Brett Carr, and Amy Smyth

The European Commission recently published its proposals for a new EU payments regime, which comprises the Payment Services Directive 3 (PSD3) and the Payment Services Regulation. During this one-hour webcast, we outline the purpose and contents of the proposals and highlight the key anticipated changes to the current regime. We share our initial thoughts and practical takeaways for the sector.

Consumers and service providers should take note of some of the enhanced risks upon an e-money institution’s insolvency.

By Hongbei Li

Technology is rapidly changing the way customers and businesses interact with financial systems. Fintech companies are a driving force behind the disruption of traditional banking and payment services, with regulatory innovation close behind.

In the 12 months to June 2021, electronic money institutions (EMIs) in the UK processed more than £500 billion of transactions, according to Financial Conduct Authority

The guidance is part of the rapidly evolving rules on anti-money laundering and aims to promote UAE as a jurisdiction compliant with best practices.

By Brian Meenagh, Ksenia Koroleva, and Matthew Rodwell

On August 1, 2022, the UAE Central Bank (CBUAE) issued the Guidance for Licensed Financial Institutions on the Risks Relating to Payments.[1]

The guidance was issued to implement the requirements of Federal Decree Law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing

Latham lawyers explore the latest insurtech trends and regulatory developments impacting the sector in Europe and Asia.

Disruptive technology is revolutionizing insurance, enabling insurers to achieve growth by leveraging big data and creating innovative solutions to enhance customers’ digital experience. We are pleased to launch Insurtech Insights, a series of webcasts to discuss the most recent trends in the insurtech space and how to navigate regulatory developments.

The report, from UK Finance, The Payments Association, and Latham & Watkins, urges fresh thinking about regulating payments in the growing digital economy.

By Stuart Davis and Brett Carr

UK Finance, The Payments Association, and Latham & Watkins have published UK Payments Regulation Review: Making sense of where to go now, a new report examining regulation of the UK’s payments industry and its impact on the financial sector, consumers, and businesses.

Amidst the rapid digitalisation of the UK economy,