The Biden-era rule that lets you move money on Zelle and Venmo is now in limbo

The Consumer Financial Protection Bureau under the Trump administration is weighing the possibility of rolling back or cutting entirely the “Open Banking Rule,” a Biden-era rule about the sharing of financial data.

This has to do with how apps like Venmo and Zelle get access to your money in the bank, so that you can send it on those payment platforms.

“Marketplace Morning Report” host Sabri Ben-Achour spoke with Steve Boms, founder and president of Allon Advocacy and the executive director at the Financial Data and Technology Association, which represents those third-party payment apps. The following is an edited transcript of their conversation.

Sabri Ben-Achour: So this rule that we're talking about is about sharing financial data, controlling how it's shared. What does that actually mean, though? Like, what's a concrete example of what this rule does?

Steve Boms: So today, about 80% of Americans use at least one financial app. Think Venmo, PayPal. These are tools that help you send and receive money faster, take payments if you're a small business owner, help you manage your money more easily and more efficiently.

Ben-Achour: So if this rule goes away, what do we stop being able to do?

Boms: Potentially, you stop being able to use these apps altogether, or they become significantly more expensive than what your bank provides you today.

Ben-Achour: When the administration's changed, the CFPB’s take on all of this changed. Why the reversal?

Boms: The first Trump administration actually started this process of creating the initial rule. And so this is a rule where in 2020 President Trump and his administration were very much in favor of your ability to share data. My view is, I think that this was an initial kind of instinctive reaction by the second Trump administration, that if something was done during the Biden administration, it must be bad. And so what you've seen over the last several months is a re-retrenchment, where the second Trump administration then took a more close look at it and said, “Well, actually, maybe we just want to amend it and tweak it.”

Ben-Achour: We do know that banks did not like this rule. Do not like this rule. What about it do they not like and how might that inform perhaps the changes that might come to it?

Boms: They didn't like that they were required to allow you as a consumer, to share your data at no charge, that it was yours to share free. And so they want to be able to charge you to share that data. They didn't like that you were able to share your data with payment tools because they themselves offer those payment tools. There is no entity that is better positioned to take advantage of this rule and offer competitive technology-based tools or products than banks themselves. They have the customer relationships, they have the resources, they have, the technology stacks, and so ultimately, this is about whether you, as a consumer, should have the right in the free market to choose a financial provider regardless of whether it's your bank or somebody else.