USA: FTC Staff Report on Mobile Payment

In March 2013, the Federal Trade Commission (FTC) has published a Staff Report "Paper, Plastic ... or Mobile?" on mobile payment. The Staff Report discusses the emerging options and concerns for consumers using mobile payment and highlights those areas where staff believes continued monitoring and attention are warranted. In the end, it is clear that building a framework for mobile payments that keeps the consumer experience in mind will go a long way towards developing consumer trust and widespread adoption of these new products and services.

FTC Approach to Mobile Payment

To learn more about the mobile payments industry and its effects on consumers, the FTC convened a workshop on 26 April 2012.  For the purposes of the workshop and the Staff Report, staff took a very broad view of mobile payments and included technologies and products in which a payment is made using a mobile device, such as payments made through Near Field Communication (“NFC”) technologies, mobile apps, online checkout wallets, and mobile carrier billing.

Emerging Options and Concerns for Consumers Using Mobile Payment

The workshop began with an overview of the innovative products and services being developed and the potential changes coming for consumers and merchants. The first panel explored the emerging options for consumers using mobile payments. Panelists spoke about the potential benefits that mobile payments offer. For consumers, mobile payments can be an easy and convenient way to pay for goods and services, get discounts through mobile coupons, and earn or use loyalty points.20 Mobile payments also may provide under-served communities with greater access to alternative payment systems.21 For merchants, mobile payments may lead to lower transaction costs by allowing a consumer to utilize funding options other than a credit or debit card.22 Mobile payments may also spur competition among payment methods, benefitting consumers and merchants alike.

While mobile payments offer many potential benefits to consumers, they also raise consumer protection concerns. Panelists identified three primary areas where concerns are likely to arise with the increasing use of mobile payments: dispute resolution, data security, and privacy.

Conclusions

Mobile payments have the potential to provide significant benefits to consumers and businesses. Industry is experimenting with many technologies, business models, and partnerships that provide consumers with new and exciting products and services. At this rather early stage, the FTC draws two conclusions:

• Call to Industry for Awareness: The FTC staff encourages those developing mobile payment products and services to create them with financial, security, and privacy protections in mind.
    
• Role of the FTC: The FTC will continue to monitor mobile payment options, and to evaluate whether consumers have adequate protections and the information they need to make informed choices about these new and innovative services.

FTC Staff Report "Paper, Plastic ... or Mobile? An FTC Workshop on Mobile Payment" of March 2013