A report on The U.S. Regulatory Landscape for Mobile Payments, released by the Federal Reserve Bank of Boston in conjunction with the Federal Reserve Bank of Atlanta, examines potential gaps in U.S. laws and regulations governing the fast-evolving field of mobile payments.
The report results from several meetings of the Mobile Payments Industry Workgroup (MPIW) convened by the Federal Reserve, including a session in April with federal and state regulators.
"The Mobile Payments Industry Workgroup is a venue for mobile payment industry leaders to discuss the many avenues along which the mobile payments system can potentially evolve in the United States,” said Marianne Crowe, Vice President of the Payment Strategies Group at the Federal Reserve Bank of Boston and co-author of the report. “The mobile payments field is growing quickly, but through the collaboration of necessary parties in this workgroup, we are working to ensure that neither industry nor consumer will be left behind."
A key finding in the report is that given the dynamic nature of mobile payments, ongoing learning is critical to advance the knowledge of regulators -- so they can address the potential effects these innovations may have on the entire risk environment. Also, further clarification of existing regulations and their applicability to mobile payment service providers will increase understanding for policymakers, dispel misperceptions, and focus collective energies on potential risk vulnerabilities in the mobile channel.
The report suggests a critical need for enhanced education programs among consumers and consumer advocates, focused on mobile payments regulation -- to address consumer protection and increase understanding of security requirements of mobile payments. The MPIW plans to build information-sharing relationships with consumer groups to advance understanding -- providing examples of different mobile scenarios, and fielding advocate questions in future MPIW meetings.
The report also highlights a policy issue for the United States -- implementing mobile payments for populations that are underserved in terms of financial, banking, and payment services. As emerging technologies such as mobile may provide added value to consumers, MPIW participants see opportunities to help underserved populations benefit from accessing the banking system — yielding benefits such as greater service levels related to financial management and transaction security.
The MPIW is currently developing strategies for sharing information about opportunities and challenges within the mobile payments "ecosystem." In this way the MPIW hopes to inform rule-making, encourage collaboration that leads to consistent and effective guidance on mobile payments, address current confusion, and create a framework for potential changes.
"As very recent announcements of other mobile payment alliances indicate, industry groups have a growing interest in being actively involved in the direction mobile payments should take in the U.S.," said Crowe. "Yet it is important that collaboration between all stakeholders continues, which is where the Fed tries to play a role."
The summary report is authored by Marianne Crowe of the Federal Reserve Bank of Boston and Mary Kepler and Cynthia Merritt of the Federal Reserve Bank of Atlanta. The report is available on the Bank's web site (www.bostonfed.org) at the following link: http://www.bostonfed.org/bankinfo/payment-strategies/publications/2012/us-regulatory-landscape-for-mobile-payments.pdf.