June 15, 2024

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He confirmed that PayPal and Square shares are falling. A new CFPB rule may be the reason.

He confirmed that PayPal and Square shares are falling.  A new CFPB rule may be the reason.

Three payment stocks traded lower on Wednesday following the release of Consumer Financial Protection Bureau data Issued It is an interpretive rule that confirms that lenders who are based on the principle of “buy now, pay later” are credit card providers.

BNPL lenders “must provide consumers with some of the basic legal protections and rights that apply to traditional credit cards,” according to the CFPB. “This includes the right to dispute charges and seek a refund from the lender after returning a product purchased with a buy now pay later loan.”

The agency said it began an investigation into the BNPL market more than two years ago.

“We are encouraged that the CFPB is promoting consistent industry standards, many of which already reflect how Affirm operates, to provide more choice and transparency for consumers,” Affirm said via email.

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Baron I have also reached out to PayPal and Block for comment.

Although the stock’s losses suggest investors may have been nervous about the news, TD Cowen analysts led by Brian Bergin were relatively optimistic.

Costs may rise slightly because Block’s Afterpay and PayPal’s Pay Later payment systems may have to compile disclosures and improve their processes for handling billing disputes, analysts wrote.

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“However, we believe it is likely that the companies were already largely in compliance with these standards because it was in their interests to properly investigate disputes,” they said.

Write to Emily Dattilo at [email protected]

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