A US lobby group representing a number of Big Tech firms has said that plans to regulate tech companies that provide digital wallets and payments apps under a financial watchdog would stifle innovation.

The Computer & Communications Industry Association (CCIA) published a statement on Monday responding to a November proposal by the US Consumer Financial Protection Bureau (CFPB) which said that smartphone payments and wallets services like Apple Pay and Google Pay provide competition for traditional payment methods but lack the consumer safeguards to which traditional players must adhere.

While yet to be finalised, the CFPB proposal would subject companies like Apple, Amazon, Google, Meta and others to the same supervision imposed on banks. This would include routine examination of compliance of unfair practices and privacy protections, while also putting the conduct of executives under the microscope.

In its current form, the proposal would cover 17 firms who are responsible for 13 billion payments annually.

While some bank industry representatives have welcomed the proposal, Krisztian Katona, head of regulatory policy at the CCIA, has said: “It’s worth keeping in mind as the CFPB considers further regulations on digital services that consumer feedback seems to point towards a general satisfaction with payment services, which suggests the absence of a market failure in the sector.

“We would urge regulators to tailor new regulations to specific problems they want to fix as broad, overly burdensome or heavy-handed digital regulation could significantly hinder new startups in this industry, and harm US innovation and economic growth.”

A separate comment letter from the Financial Technology Association has also shared similar concerns for the new proposal, stating that existing regulations are sufficient and that the rulemaking process should be suspended.

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