Mobile wallets are finally coming under the purview of federal regulators. Google Wallet, Venmo, and Square Cash are among the wallets which will be affected in a new ruling from the Consumer Financial Protection Bureau aimed at wrangling the prepaid card industry.
Prepaid cards are a means of storing cash on a card and are often used by those who don’t have a bank account. The market for both mobile wallets and prepaid cards is growing. A PEW report from 2015 says roughly 23 million Americans use prepaid cards regularly. Meanwhile, PayPal reported Venmo users transferred $1 billion in January alone. The CFPB rule will ensure that entities that store consumer funds will limit potential loss to consumers in the event their card or account is compromised, according to the Wall Street Journal. Card providers and mobile wallets will also have to make disclosures more clear to their users. Apple Pay and other apps that merely store payment credentials rather than cash, will not be affected by the new law. The ruling is in part a response to a debate over whether prepaid accounts should have the ability to overdraft (and thus incur fees).