Visa shut down its Open Banking services in the US due to uncertain regulations regarding consumer data rights, as reported by individuals familiar with the matter.
The information was provided by individuals who preferred to remain anonymous due to the private nature of the matter.
The decision is made at a critical moment when the future of a regulation preventing banks from charging for their customers’ data access is uncertain.
The Consumer Financial Protection Bureau is attempting to change the regulations on Open Banking, which involves sharing consumer data among banks and other financial service providers at no cost.
A Visa spokesperson mentioned that the company is focusing its Open Banking strategy on promising markets like Europe and Latin America, according to a statement responding to a request for comment on the initiative. Visa’s CEO, Ryan McInerney, highlighted in a July conference that these markets hold the most significant potential for Open Banking.
The Visa ruling comes as JPMorgan Chase intends to implement fees, potentially amounting to hundreds of millions of dollars, for customers to access their bank information, as per a July report from Bloomberg News.
Fintech companies expressed anger over the regulation, stating that they are unable to function without access to customer data.
The decision regarding Visa was made separately from the JPMorgan strategy shift, according to a source familiar with the matter.
Visa alters its approach.
Visa’s plans to purchase Plaid for $5.3 billion were scrapped in 2021 due to antitrust concerns by the U.S. Department of Justice. Instead, Visa later acquired Tink, a Swedish competitor of Plaid, for around $2 billion.
Visa executives mentioned that Tink would be a valuable partner to enhance innovation in Open Banking.
The Open Banking landscape in the US has since evolved.
Banking lobby groups quickly sued to prevent the rule from taking effect after the CFPB repealed it during the final months of the Biden administration, arguing that the agreements could facilitate fraud and increase their members’ liabilities.
Supporters of the regulation believe that it enables consumers to utilize a broader range of financial services, encourages increased competition, and enhances data protection. Recently, the CFPB initiated efforts to begin revising the regulation.
