In anticipation of a large-scale migration of consumers to a new type of payment technology known as mobile wallets, lawmakers are wondering how best to regulate the industry, or if they should at all.
Late last month, federal lawmakers held a pair of hearings on the future of mobile payments, and the necessity of regulating the rapidly emerging industry was a subject of considerable debate, according to a report from American Banker. On the one hand, those in favor of creating specific regulations for mobile wallet companies say that there are significant gaps between regulations for credit card lenders and payment processors and those for telecommunications companies like cellphone service providers. Consequently, it may be difficult to get companies that create and manage mobile wallet services on the same page as far as what will be required of them. This is especially true because even companies outside these two industries are already developing their own payment platforms.
“There needs to be some cooperation between the wireless and banking regulatory frameworks, because otherwise we’re going to have a mess,” said Suzanne Martindale, a staff attorney for Consumers Union, according to the news site. There is no one clear regulator who is in charge of all mobile payments. It’s very fractured right now. It’s an accident of history that technology moves beyond what’s on the books.”
However, there is also a large contingent which believes that more regulation is unnecessary and even redundant, the report said. They argue that while existing laws may not cover a handful of the complexities involved in bridging the gaps between mobile and financial regulations, these are not so egregious that they couldn’t be covered with patchwork regulations under existing framework. However, even this group concedes that there will need to be cooperation and coordination of regulatory oversight across several federal agencies, including the Consumer Financial Protection Bureau, Federal Trade Commission, Federal Communications Commission and more.
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While mobile wallets are still burgeoning, it’s expected that when widespread adoption hits, it will hit hard. Estimates by outside analysts show that by the end of 2015, the industry could be worth as much as tens of billions annually.
Image: Phil Campbell, via Flickr.com