Consumer Financial Protection Bureau

Another great post from our sister blog, MoFo Tech:

The potential for mobile payments is huge. So are the potential legal and regulatory hurdles.

Banks, retailers, and pundits are paying a lot of attention to mobile payments, which typically involve the use of smartphones and tablets to pay for purchases.  But a lack of mobile infrastructure has kept the use of mobile payments fairly low in the U.S.

The space is evolving quickly, however.  More infrastructure is being rolled out, while new software and cloud-based solutions are enabling payment processing without the need for a network of specialized in-store terminals.  For their part, consumers are already well equipped to take advantage of these developments.  Today, 61 percent of American consumers have smartphones or tablets, up from 48 percent last year, according to a recent study from Vantiv, a provider of payment processing strategies, and the Mercator Advisory Group, an independent research firm.

Many of these consumers are already using these devices as shopping tools—comparing in-store prices with online prices, researching products, downloading coupons, and discussing potential purchases with friends.  So it’s fair to assume that consumers will adopt mobile payments quickly as they become easier and more widespread.  By 2018, Mercator estimates, the value of mobile payments will increase sevenfold, to $362.8 million a year, up from $51.4 million today.

There’s a great deal of opportunity here.  But there’s also much to consider from a legal standpoint, because mobile payments represent the convergence of business, technology, and banking.  “You have to think about issues like the structure of the mobile payment offering, including the source and settlement of the funds to determine the applicable regulatory framework,” says Obrea Poindexter, a partner at Morrison & Foerster who leads the mobile payments group.  “There are technology issues relating to cybersecurity and authentication as well as regulatory issues, such as maintaining the privacy of consumer data and complying with anti-money laundering laws.”


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On December 11, 2013, the Federal Financial Institutions Examination Council (FFIEC) issued final guidance for financial institutions relating to their use of social media (the “Guidance”).  With its release, the FFIEC adopts its January 2013 proposed guidance in substantially the same form.  (Socially Aware’s overview of the proposed guidance is available here.)