Visa Shuts Down Open Banking Business in U.S Amid Regulatory Uncertainty

TL/DR –

Visa has closed its open banking business in the US during a period of regulatory uncertainty around access to consumer banking data. The payment giant will now focus its open banking strategies on high potential markets like Europe and Latin America. The closure comes at a time when some banks, including JPMorgan Chase, are considering charging fees for access to customer data, although it is said this did not influence Visa’s decision.

Visa Closes Open Banking Business amid Regulatory Uncertainty in the U.S

According to undisclosed sources, financial giant Visa has ceased its open banking operations in the United States, as reported by Bloomberg. The closure coincides with ongoing debates around the regulation of consumers’ banking data access, with proposals from several banks to levy fees for such access.

Visa conveyed its intent to shift its open banking strategy focus towards markets with substantial potential, such as Europe and Latin America. The company’s decision, however, is not influenced by JPMorgan Chase‘s plan to charge fees for data access, according to an anonymous source cited by Bloomberg.

In related news, JPMorgan revealed plans to start charging for access to customer bank data earlier in July. The charges, which could potentially reach hundreds of millions of dollars, pose a threat to the business model of the FinTech sector.

The Consumer Financial Protection Bureau (CFPB) is currently soliciting public comments to guide its implementation of the open banking legislation, Rule 1033. The CFPB is particularly interested in comments and data on fees, data security, and data privacy.

The final rule was announced on October 22, and was met with legal challenges citing concerns over consumer financial data security and privacy. Following a leadership change, the CFPB is now considering amending the open banking rule.

The Bureau is planning to explore various fee models, unlike the previous rule that prohibited fees. PYMNTS reports that while 46% of consumers expressed a high readiness to adopt open banking payments, only 11% have done so according to their recent “Consumer Sentiment About Open Banking Payments” study.

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