Top financial regulator warns U.S. is developing a 'Chinese-style' payments industry 'fueled by uncontrolled flows of consumer data'
Consumer Financial Protection Bureau Director Rohit Chopra warned lawmakers Tuesday that the U.S. payments industry is developing a “Chinese-style” market structure in which large technology companies leverage consumer data to power their financial-services subsidiaries.
“The United States is lurching toward a market structure where finance and commerce commingle, fueled by uncontrolled flows of consumer data,” Chopra said in a hearing before the Senate Banking Committee, adding that tech conglomerates like Ant Group and Tencent Holdings Ltd. TCEHY, -1.98%, which control the payments platforms Alipay and WeChat, dominate the payments industry in China.
“These tech giants have extraordinary access to data about businesses, banks and consumers, including financial businesses that they may compete with,” Chopra said. “Over the last several years Chinese tech and finance giants have developed so-called social scores that goes beyond credit performance and relies on analyzing user habits unrelated to credit and banking.”
Chopra warned that absent regulation, the U.S. payments industry could adopt the same sort of tactics, raising questions about “privacy fraud and discrimination.”
Consumer Financial Protection Bureau Director Rohit Chopra warned lawmakers Tuesday that the U.S. payments industry is developing a “Chinese-style” market structure in which large technology companies leverage consumer data to power their financial-services subsidiaries.
“The United States is lurching toward a market structure where finance and commerce commingle, fueled by uncontrolled flows of consumer data,” Chopra said in a hearing before the Senate Banking Committee, adding that tech conglomerates like Ant Group and Tencent Holdings Ltd. TCEHY, -1.98%, which control the payments platforms Alipay and WeChat, dominate the payments industry in China.
“These tech giants have extraordinary access to data about businesses, banks and consumers, including financial businesses that they may compete with,” Chopra said. “Over the last several years Chinese tech and finance giants have developed so-called social scores that goes beyond credit performance and relies on analyzing user habits unrelated to credit and banking.”
Chopra warned that absent regulation, the U.S. payments industry could adopt the same sort of tactics, raising questions about “privacy fraud and discrimination.”
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