At a March 22nd House Financial Services hearing, lawmakers were introduced to the potential and the potential security issues surrounding mobile payments. While the story from PaymentsSource holds few surprises, it does point out two things.
First, the hearing demonstrates, yet again, the disconnect between what is happening in Internet-powered technology and congressional awareness. Second, the story points out the regulatory morass of overlapping administrative oversight and gaps in that function that mobile payments may be subject to. That represents a risk of unnecessary cost and the risk of limiting technical innovation. The uncoordinated activity of multiple agencies, empowered by regulations written for a different time, is not a reason to create yet another agency. It’s an opportunity to rationalize oversight and harmonize regulation.
Of course, Congress isn’t about rulemaking these days. Its game is about politics. So the best the payments technology industry can do is to educate, and lobby, in the hopes of limiting the damage.
From the article:
Troy Leach, chief technology officer of the Payment Card Industry Security Standards Council, an international standard-setting body, said while technology to improve security is quickly progressing, there are still risks from the rapid development of mobile applications. The lack of traditional security controls for mobile payments, potential unauthorized access to payment applications and the potential for abuse of protective tools such as data encryption also pose risks, he said. “A failure to adequately address any of these valid concerns can put payment card data at risk,” Leach said in written testimony. But Ed McLaughlin, the chief emerging payments officer for MasterCard Worldwide, assured lawmakers that when customers swipe their cell phones at a gas station or grocery store, they have better protections than they do with credit and debit cards.
“We would not move toward this payment environment unless we could enhance the security of what we’re doing,” he said. The hearing also raised questions about the state of regulation for mobile payments.
One challenge facing the federal government is the lack of clarity over what agency is responsible for regulating mobile payments. For example, the Federal Communications Commission, which oversees wireless carriers, has not traditionally played a role in regulating payments.
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