House Subcommittee Investigates Mobile Payment Security and Regulation

The House Financial Services Subcommittee on Financial Institutions and Consumer Credit held a hearing on March 22, 2012 on “The Future of Money: How Mobile Payments Could Change Financial Services.” Four panelists testified:

Richard Oliver, retired Federal Reserve Bank of Atlanta, spoke about the Mobile Payments Working Group and the report he co-authored in March 2011, “Mobile Payments in the United States: Mapping Out the Way Forward." Mr. Oliver also discussed the key areas of study by the Mobile Payments Group: open mobile wallets; the use of near field communications (NFC) for payments; dynamic data authentication; industry certification; regulatory certainty; and Trusted Service Managers. You can read his testimony here.

Troy Leach, Chief Technology Officer of the PCI Security Standards Council, discussed the challenges of securing cardholder payment data and building consumer trust through efforts such as PIN Transaction Security and software systems such as the Payment Application Data Security Standard. Mr. Leach’s testimony can be found here.

Ed McLaughlin, Chief Payments Officer, MasterCard Worldwide, explained MasterCard’s broad international experience with mobile payments, as well as its existing PayPass (contactless payments) and Moneysend (text message-based interpersonal payment system) products. Read Mr. McLaughlin’s testimony here.

Randy Vanderhoof, Executive Director of the Smart Card Alliance, spoke in detail about NFC contactless payments such as Google Wallet and Isis, including NFC’s regulatory advantages (i.e., use of existing credit or debit rules), security and reliability. Mr. Vanderhoof’s written testimony, including useful appendices that explain the basics of NFC payments, can be found here.

Finally, Suzanne Martindale of Consumer’s Union testified about international success with mobile payments as well as the risk of confusion and accountability her organization sees in the emerging mobile payments systems. Her written testimony is here.