Experts wonder about mobile payment regulations

While there has been a great deal of regulatory focus on the banking industry in the last few years, many experts are now wondering whether more needs to be done to increase consumer protections for the burgeoning mobile payment industry.

There has been a considerable amount of debate in the halls of Congress in recent weeks over whether the mobile payment industry needs to be regulated in similar ways to the banking industry, according to a report from American Banker. Congress recently held a pair of introductory meetings on the topic in March, and some argued that because mobile payments seem to be the next big thing in how consumers will make purchases and manage their finances on a day-to-day basis, there will soon be a need for lawmakers to take a long, hard look at the way in which these transactions are handled.

Proponents of heavier regulation say that there might even be the necessity for a body to specifically create rules for this type of transaction, while others say that a framework needs to be built to bridge some of the inconsistencies between rules for wireless service providers and those for banks, the report said. This would ostensibly be for the good of both the consumers, who may require greater federal protection, and the businesses operating these mobile payment systems themselves, who would have a clearer mandate for how to handle them.

They believe this will be particularly important because of the number of businesses in different industries who are now entering the mobile payment game, the report said. Companies like Google, AT&T, Verizon, and even MasterCard and Visa are developing their own platforms and obviously operate in a number of different realms. It may be difficult to make clear exactly what is expected of each without a regulator for the mobile payment industry as a whole.

An opposing viewpoint

However, others who believe there is already too much federal regulation say that these considerations for various emerging payment methods can instead be worked into existing rules so as not to further burden payment processors, the report said. 

"Mobile [payments] may have some additional complexities in terms of the layers of players, such as the mobile carrier, which may be subject to its own regulatory framework as a communications provider," Jessica Sklute, special counsel at Schulte Roth & Zabel LLP, told the news site. "But for the most part, as with any other payment form, it can be conducted within the existing regulatory framework if the provider of the financial service is properly regulated, such as a bank or regulated money transmitter."

Mobile payments are generally believed to be more secure than traditional credit card use, but consumers who want to protect their finances will also need to make sure they regularly check their credit reports. Doing so will allow them to spot any potentially unfair markings that can lower their credit scores.