![]() This issue spotlight analyzes the extent to which popular payment apps, sometimes described as P2P payment platforms, claim to provide federal deposit insurance coverage to users through business arrangements with banks or credit unions. These events have spurred renewed attention on the varied types of financial institutions consumers use and the extent to which consumers’ funds at those financial institutions are protected from losses. ![]() 3 Additional concerns arise with the growth and attendant risks of non-traditional financial services platforms. 2 Following the demise this year of Silicon Valley Bank, Signature Bank, Silvergate Bank, and First Republic Bank, the public has learned more about the importance of federal deposit insurance coverage. In 2022, the collapse of crypto asset platforms FTX and Voyager led to significant harms to platform consumers who lost hundreds of millions of dollars, in addition to their crypto assets. There has been significant public attention paid recently to the safety and stability of stored funds, particularly when it comes to fast-growing financial firms. Indeed, the companies offering many of these widely used services have a strong financial incentive to encourage users to keep their funds stored rather than automatically sweeping them back into linked bank or credit union accounts. ![]() They are also storing billions of dollars through these services outside of their federally insured bank or credit union accounts. consumers and businesses are not simply using these services to transfer funds. For example, total person-to-person (P2P) payment dollar volume quadrupled between 20. In recent years, transaction volumes on payment apps have substantially increased.
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