#mobilepaymentlaw

“We have legacy payment systems which are inherently tied within each country. Marc Andreessen of Netscape fame and of recent Horowitz fame has a saying that he oftentimes employs, "Software eats blank. Technology eats blank." You can see what's happened to the newspaper industry. You can see what's happened to the music industry or what's currently happening to the television industry. If you think about fiat currencies and you think about legacy payment systems, I think you can see the opportunity for emerging payment systems and virtual currencies”

FCC commented that mobile payments through mobile operators should be mandated by law or regulations so that customers have protections, these include:

1) Customers should have ability to block third party charges.

2) Operators should clearly detail which third party charges may apply.

3) Operators should establish processes for charge dispute.

4)Notify of reoccurring charges.

5)Require third parties to maintain records of charges in case of dispute.

6)Standardize procedures to be in line with credit and debit payments.

7)Mobile operators should allow delay of payments for good faith charge disputes.

8) Maintain procedures to prevent bill cramming.

9) Create systems for detecting fraudulent activity.

CFSB noted various concerns for GPR cards in Mobile Payment and are currently working on regulations. These include: 1) Liability limits 2) Disclosure for fees 3) Error Resolution 4) Authorization for recurrent payments.

NACHA White Paper Discusses Mobile Payments using ACH:

BENEFITS: Merchants: The ACH allows cost savings, allows ability to cross sell, incorporate loyalty, and rewards and provide coupons, and allows portability to make convenient payments. It helps smaller merchants that find card payments cost prohibitive. Consumers: Using ACH for consumers allows avoiding late payments. ACH also helps the under banked with ACH based products. Corporate Treasury: allows corporate treasury to remain efficient and productive using mobile device and simpler authentication. Financial institutions: Using ACH for mobile enhances customer appreciation and allows offering various products for mobile payment.

RISK: Protecting data and privacy, by educating customers about mobile security codes, stolen phone procedures, downloading malware, phishing via sms. Application providers must also design security measures for bill payments and purchases at point of sale.

Technology Challenges: Must account for low battery life,  network coverage issues, adapting to various payment methods for different platforms. Small size: difficult to provide disclosures Rate of technological advances: risk waiting to adopt to a system or move quickly and be outdated. 

Mobile Payment Product Risk: The technology not used by intended audience, not adopted by merchants and consumers, not keeping abreast to regulatory developments and risk of poor customer experience. There should be user authentication measures and device authenticated measures before a payment is made. The data used in transit should be safeguarded or able to deleted if the phone is stolen. Mobile device makers should consider double keying of information so it is accurate, providers should send disclosures by email as well as on the screen, understand the challenges of different types of  devices for the payment and be aware of updates to systems for security and regulations.