Visa Shuts Open Banking Business in US, Focuses on Other Markets
News Summary
Payment giant Visa has decided to shut down its open banking business in the U.S., intending to shift its strategic focus to high-potential markets like Europe and Latin America. This move occurs amidst regulatory uncertainty in the U.S. open banking sector, particularly concerning access to consumer banking data. At least two banks in the U.S. have indicated they may charge fees for data access. Although JPMorgan Chase reportedly planned to charge hundreds of millions in fees, it was stated this did not directly influence Visa's decision. Previously, the CFPB's Rule 1033, announced under the Biden administration, was challenged by a lawsuit on the same day due to data security and privacy concerns. Under the Trump administration, the CFPB's new leadership has indicated an accelerated process to revise the open banking rule, potentially allowing banks to levy fees that were previously barred. While consumer sentiment towards open banking payments is high (46% highly willing), actual usage stands at only 11%.
Background
Open banking allows third-party financial service providers to securely access consumer banking data via APIs to develop new applications and services. In the United States, the Consumer Financial Protection Bureau (CFPB) is responsible for establishing and enforcing related rules. Under the previous Biden administration, the CFPB announced Rule 1033 on October 22, 2024, aiming to regulate consumers' access to their financial data. However, the rule quickly faced legal challenges over data security and privacy concerns. After President Trump's re-election, the CFPB's leadership changed under his administration. The new leadership informed a judge on July 29, 2025, that it would engage in an “accelerated rulemaking process” to revise the open banking rule, requesting a stay on the existing lawsuit. This move suggests the CFPB might consider different fee models, whereas the prior rule barred fees. This has sparked discussions about whether banks can charge FinTechs for data access, with JPMorgan Chase previously indicating plans to levy such fees, potentially threatening the FinTech sector's business model.
In-Depth AI Insights
What are the true strategic considerations behind Visa's withdrawal from the U.S. open banking market? - While regulatory uncertainty is the stated reason, Visa's choice of Europe and Latin America likely reflects a greater perceived potential in these markets regarding open banking ecosystem maturity, regulatory clarity, and viable monetization models. - The complex state-level regulations, data privacy concerns, and the ongoing tug-of-war between traditional banks and FinTechs over data ownership and fee structures in the U.S. market may have led Visa to believe that scalable and predictable revenue is difficult to achieve in the short term. - In nascent markets requiring significant initial investment, companies often prioritize environments with more favorable regulations, higher user acceptance, or clearer competitive landscapes for deeper engagement. How might the Trump administration's CFPB revision of the open banking rule fundamentally reshape the competitive landscape for the U.S. FinTech industry? - The potential for the CFPB to allow banks to charge for data access would pose a significant challenge to FinTech companies reliant on free or low-cost data access, particularly for startups. - This move could benefit large incumbent banks by enabling them to consolidate market dominance through control over data access and its cost, potentially slowing innovation and disruption in the FinTech sector. - It may also force FinTechs to seek new business models, such as pivoting to more direct consumer services, or forging closer partnerships with banks to share data costs. What unique challenges and opportunities might the U.S. open banking market face going forward? - Challenges: Regulatory fragmentation and uncertainty could persist, making it difficult for market participants to formulate long-term strategies. The introduction of data fees may increase operating costs for FinTechs, which could ultimately be passed on to consumers, affecting service adoption. - Opportunities: If a fair and transparent fee framework can be established, it might incentivize banks to invest more resources into improving data sharing infrastructure and security. Furthermore, the high potential consumer willingness (46%) for open banking payments indicates substantial growth potential once regulatory and business model hurdles are addressed.