Big Tech Dodges CFPB Supervision—for Now

Congress kills a CFPB rule aimed at supervising Big Tech payment apps, leaving consumer oversight in limbo.

Welcome to Today in Payments, I’m your host, Patti Murphy, here with your weekly dose of payments notes.

CFPB Rule Governing Big Tech Payment Apps is Dead

The U.S. House has approved a resolution overturning a Consumer Financial Protection Bureau (CFPB) rule that would have subjected Big Tech payment apps to the same supervisory standards as bank-owned payment services. The rule, announced by the CFPB last fall, aimed to apply to tech companies processing more than 50 million transactions annually—including Apple Pay, Google Pay, PayPal, Square, and potentially X (formerly Twitter).

Unlike regulations, which establish specific legal requirements, supervisory rules give the CFPB authority to oversee consumer protections—such as how consumer data is shared and used.

The Senate passed a similar resolution last month. President Trump has indicated he will sign the measure, which would officially nullify the rule.

DoJ Greenlights Capital One–Discover Merger

The Department of Justice has reportedly given the green light to Capital One’s acquisition of Discover, signaling no antitrust objections. This marks a shift from earlier concerns expressed by the Biden Administration regarding the competitive implications of the deal.

DoJ has notified both the Office of the Comptroller of the Currency (OCC) and the Federal Reserve—who hold the final say—that it has found no basis to block the merger, according to published reports.

With $479 billion in assets, Capital One is the ninth largest U.S. bank. The Discover acquisition would provide access to a network of 305 million cardholders and expand Cap One’s already substantial base of 100 million card customers. Forbes reports the merger would make Cap One the nation’s largest credit card issuer.

Shareholders have approved the all-stock transaction, and the deal is expected to close early this year, pending regulatory approval.

Discover is expected to retain its brand, and Cap One may shift some card volume to the Discover network. This could dent Visa and Mastercard’s dominance in credit card payments.

As of late 2021, Visa held 48% of the U.S. credit card market, with Mastercard at 36%. Discover and American Express accounted for the remaining 16%. If Cap One moves significant volume from Visa and Mastercard to Discover, it could significantly shift industry dynamics.

Cap One may also gain more leverage in negotiating network fees with Visa and Mastercard, according to Lulu Wang, assistant professor of finance at Kellogg School.

One angle not widely reported: Discover owns the EFT network Pulse. That could become strategically important if "Durbin 2.0" becomes law. Pulse might give Cap One a way to reduce interchange costs on debit card transactions—possibly skirting some of the regulation’s impact.

Stripe Seeks Special Banking Charter in Georgia

Stripe is the latest payments company to apply for a special-purpose banking charter in Georgia, according to Payments Dive. If approved, the San Francisco-based firm could know by July whether it gets the go-ahead.

The proposed “merchant acquirer limited purpose bank charter” would give Stripe direct access to card networks—eliminating the need to rely on partner banks for transaction processing. The charter would be restricted to merchant acquiring and would not allow for traditional banking activities like deposit-taking.

Georgia’s banking regulator recently approved a similar charter for Fiserv. Only one other company—Credorax (now part of Shift4)—has received such a charter since the framework was introduced.

Stripe is already a direct member of card networks in nine countries, including the U.K., so this move would extend an existing strategy into the U.S. market.

Companies Still Like Checks, Despite Fraud

Recently, we reported that President Trump signed an executive order to phase out checks from the national payments infrastructure. But don’t expect businesses to follow suit just yet.

Despite rising check fraud, most companies are holding firm.

According to the Association for Financial Professionals’ Payments Fraud and Control Survey, 75% of companies still use checks for some payments, and 70% have no plans to stop. Meanwhile, treasury professionals identified checks as the most fraud-prone payment method.

The Federal Reserve’s Financial Institution Risk Officer Survey found that checks are the second most frequent target of payment fraud—right after debit cards. Incidents of check fraud rose 10% last year, with monetary losses up 5%.

Checks are also costly. The 2022 AFP Payments Cost Benchmarking Survey reports that issuing a check costs between $2.01 and $4.00. Even receiving a check costs between $1.01 and $2.00. ACH payments, by contrast, range from just 25 to 50 cents.

These high costs are driven by manual processes—like reconciling payments and applying proper controls to prevent fraud.

So, despite the risks and costs, the humble check continues to stick around in corporate payments.

That’s all for Today in Payments. Stay tuned for your weekly dose of payments notes.