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Portals and Rails, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Portals and Rails and look forward to collaborating with you.

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August 06, 2012


Policymakers, Regulators Keep a Watchful Eye on Mobile Payments

Policymakers and regulatory authorities are beginning to turn their collective eye toward mobile payment developments and with good reason. The rapidly changing environment and the entry of nonbanks in mobile-enabled financial services create a new paradigm in regulatory oversight for consumer protections, bank safety and soundness, and regulatory compliance.

In recognition of these environmental dynamics, the Federal Reserve Banks of Atlanta and Boston recently convened a joint meeting of the Mobile Payments Industry Workgroup (MPIW) and regulatory authorities to discuss recent mobile payment developments and potential regulatory gaps. The two Reserve Banks then jointly published on July 30, 2012, a summary of the meeting describing the meeting dialogue between members of the MPIW and the regulatory community.

You can read the paper on the Atlanta Fed and the Boston Fed websites, but below are some quick highlights.

The complexity of the regulatory framework for mobile financial services requires further ongoing analysis—While regulators recognize supervisory elements common to both mobile and Internet environments, they say that the fast pace of change requires them to more closely monitor mobile payment developments. Regulators have an interest in ensuring safety and soundness as well as consumer protections in the emerging mobile payments environment. Both these objectives require that financial institutions adequately manage vendors when they outsource and partner with third parties in new mobile payment business models.

Education is needed to teach all stakeholders about the mobile environment, from regulators to consumer advocates to consumers themselves—Security, privacy, and consumer protections are important themes that all stakeholders should understand in order to be able to communicate appropriately with policymakers in mobile payments regulation. As mobile payment systems evolve, it will be important to engender cross-industry dialogue at both the industry and regulatory levels to ensure risks in these key themes are sufficiently addressed.

Next steps
The MPIW plans to continue to meet on regulatory issues with regulators as the mobile payments market matures. These meetings will serve to educate the regulators about mobile payment developments and risk mitigation initiatives. At the same time, regulators will be able to share early insights and concerns about mobile payments with the MPIW, while hearing their input and perspectives on future policy and regulatory decision making.

Cynthia MerrittBy Cynthia Merritt, assistant director of the Retail Payments Risk Forum

August 6, 2012 in innovation, mobile payments, regulators | Permalink

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