The U.S. House of Representatives' Financial Services
Subcommittee on Financial Institutions and Consumer Credit held a
March 22 hearing, the first of a three-part series, on
advancements in mobile payment systems and how it might
impact merchants, consumers, and financial services entities, as
well as current regulatory arrangements.
Chaired by Rep. Shelley Moore Capito (R-W.V.), the House
committee heard from witnesses testifying on behalf of the
Consumers Union, the Smart Card Alliance, the Federal Reserve Bank
of Atlanta, PCI Security Standards and MasterCard.
While lawmakers were intrigued by the prospect of shifting away
from traditional cash, check and card transactions and toward
electronic phone-mechanized payments, some during the hearing
expressed unease over potential security risks.
"We are on the precipice of fundamental change in the way money
is exchanged between consumers and businesses," said Chairwoman
Capito, concluding that "we must make sure that these payments are
safe and secure."
At the forefront of the discussion were chip-and-PIN
technology and Near Field Communications (NFC) contactless
technology. Unclear to lawmakers and industry representatives,
however, is where jurisdiction should prevail for a technology that
converges financial and communications services. Applicable
oversight stretches across an assortment of regulators, including
the Federal Communications Commission, which oversees wireless
communications, the newly-established Consumer Financial Protection
Bureau, and the Federal Reserve, which manages payment
Also discussed were the
findings of a working group, organized by two Federal
Reserve banks and composed of industry participants, which
identified potential security risks involved with mobile
payments and offered security measure recommendations.
"It's important to note that the mobile payments industry is in
a very early stage of development in this country, but the market
is working properly to explore a variety of implementation
alternatives and underlying technology solutions," Richard Oliver,
a payments consultant and recently retired executive vice president
for the Federal Reserve Bank of Atlanta, said before the
The U.S. Senate Banking Committee held a similar, but less
extensive, hearing March 29 that built upon the Federal Reserve
working group's findings and reiterated the security concerns
conveyed prior during the House Financial Services hearing.
Read the official testimony and see the archived webcasts here and
Konstantine Kastens is Government Relations Administrator