James Huber Featured in The Green Sheet: PayPal ruling lifts all digital wallets

A version of this article originally appeared on The Green Sheet. See the original post here.

PayPal ruling lifts all digital wallets

April 3, 2024

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March 29, 2024, ruling by a federal judge ended a four-year debate between PayPal Holdings Inc. and the Consumer Financial Protection Bureau over digital wallet and prepaid card fee structures and disclosures. Judge Richard L. Leon of the U.S. District Court for the District of Columbia agreed with PayPal that digital wallets are materially different than “general purpose reloadable (GPR) cards” and should not be held to the same regulatory standards.

James Huber, partner at Global Legal Law Firm, praised the decision, stating it reflects improved communications between the payments industry and the U.S. government’s judicial branch.

“The ruling signifies that Courts are starting to understand the payments space, specifically, the ability to differentiate prepaid cards from digital wallets,” he said. “The court held that the CFPB ‘ignore[d]’ the features of a digital wallet and highlighted that there were many distinctions between the products.”

Huber also noted that the court affirmed digital wallets are substantially different than prepaid cards, despite having similar characteristics. For instance, Judge Leon pointed out that digital wallets are financial products that electronically store user credentials and rarely carry balances. Most digital wallet providers do not charge users to open or maintain accounts, Leon noted, adding that prepaid cards typically carry balances and charge a range of service fees.

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You can read more of this article and Huber’s comments here.