The Payment Strategies team at the Boston Fed is involved in many aspects of mobile payments—from convening the Mobile Payments Industry Workgroup, to looking at the ways mobile banking can help the underserved and unbanked. But behind the latest mobile payment app and mobile wallet is an international workgroup—made up of delegates from 24 countries—seeking to develop international standards for mobile financial services. Susan Pandy, Director of Payment Strategies at the Federal Reserve Bank of Boston, represents the United States and the Federal Reserve on the group.
Susan Pandy, Director of Payment Strategies
1. Almost every Reserve Bank leads on some aspect of payments standards, and mobile payment standards are Boston’s responsibility. Can you tell us a bit more about the focus of your work on international standards?
I’m a member of a group called Workgroup 10, convened in 2009 by the International Standards Organization (ISO), which is the global body that sets technical standards and specifications for almost every consumer product available today. When you use your phone to pay for lunch at a food truck, you would never imagine that delegates from across the globe are actually debating whether your transaction qualifies as a mobile payment—but that’s what we are doing. Broadly speaking, we are trying to agree to a set of standards that can be used to define various aspects of mobile financial services across the globe. This includes everything from the platform (such as a mobile app) to the device (such as a phone or tablet) to the “plumbing” that gets the payment from you to the owners of food truck.
Until the formation of Workgroup 10, there really were no technical standards covering mobile financial services in broad terms. We work as part of a national US coalition (ANSI X9) that is looking at a wide range of standards that impact the payments industry. With rapid growth in the mobile sector, my fellow delegates and I are producing a series of technical documents to put a framework around many aspects of the mobile financial services (including banking, mobile wallets, contact payments, and the like) in use today. Ultimately, we hope these standards serve as a benchmark that companies around the world are encouraged to adopt when implementing new mobile technologies.
2. The Boston Fed hosted the Workgroup 10 in October 2013, and the body recently convened at La Caixa Bank in Barcelona, Spain. How often do you meet, and can you share some about the progress being made?
Establishing standards is a multi-year effort. Our group meets in-person on a semi-annual basis for roundtable discussions, just as we did in Spain in the early spring. Throughout the year, however, we share draft standards, collect feedback, and debate additions and subtractions. Because there are so many different definitions and types of standards to consider, we’ve grouped our work around key issue areas including security, core banking, and payment type (person to business, person to person, etc.), among others. During the discussion and debate process, one country might raise a concern that then violates another country’s policies. Our job is to get everybody to the middle—a job that requires patience and diplomacy along the way.
Once we are generally satisfied with the standards framework for a particular area, we open a ballot period for roughly two weeks. The most recent ballot period closed on July 2, and we’ll review another round of comments before holding a final 90-day balloting period in November 2014. Pending the outcome of that balloting process, we hope to publish a final set of international standards that we recommend to mobile financial services companies.
3. Why should the average consumer care about international standards for payments? In other words, how does it impact our ability to check an account balance or pay for a coffee with a smartphone, for instance?
Remember that countries all over the globe are using various kinds of electronic payment methods. For example, in Japan and China, the ‘mobile wallet’ is more prevalent, and so those delegates to the committee are interested in our technical specifications around contactless payments. In South Africa, a lack of brick-and-mortar banks means person to person payments are ubiquitous. In Nigeria and Uganda, “eMoney”—currency actually stored on the phone, like a piggybank in your pocket—is commonplace. Compare these technologies to popular mobile payment apps here in America and you’ll understand why it is increasingly critical that we establish common definitions that allow us to collectively build new technologies and buy and sell goods and services in an evolving payments world.
What’s more, every country, from China to Uganda to the U.S., is concerned with regulation and security. Defining international standards is ultimately all about the consumer: providing a safe, secure, and innovative payments landscape in an increasingly mobile and connected world.