Mobile payments: Who will regulate?

As more Americans learn how to shop with their cellphones, Washington is trying to figure out who should answer the call to regulate this new form of commerce.

A variety of competing business sectors — from telecoms to financial institutions to Internet companies — are launching pilots of new technology they hope will replace consumer reliance on credit cards with the wave or tap of a mobile phone. The problem is, no one knows which agency should regulate. “They want to make your mobile phone akin to your wallet,” said Suzanne Martindale, an attorney and associate policy analyst in Consumers Union’s San Francisco office, who recently co-authored a white paper about mobile payments. “But the laws haven't necessarily caught up to the state of the payment technology.” In particular, Martindale said, banking laws and policies governing private data and consumer protection may need to be extended to cover mobile payments. Mobile payments may cross regulatory domains covered by many different federal agencies. The Federal Reserve Board, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and other agencies regulate banking. The Federal Communications Commission has authority over wireless carriers. The Federal Trade Commission, meanwhile, protects consumers from fraud and privacy violations.

The Federal Reserve Banks of Atlanta and Boston have been trying to address this issue — among other questions surrounding mobile payments — in a working group of wireless carriers, issuing and acquiring banks, credit card brands, payment processors and trade associations. The group has met five times over the past 16 months. In a report issued March 25, the group concluded that members want “to understand sooner rather than later the regulatory focus and oversight regimen of each agency in the mobile payments world, as well as the applicability of current regulations and laws to the mobile environment, in order to avoid potential missteps as they proceed to develop mobile payments solutions.”