CNP Expo: Danger of ‘Over-Reactive’ Legislation in Payments

May 22, 2013

The intersection of government policy and innovation could result in regulations being made by lawmakers who do not fully understand the emerging mobile payment industry. A panel of experts on government and legislative affairs led a discussion at a Wednesday afternoon session of the CNP Expo on the state of public policy as it relates to payments and innovation. For instance, the panel said they felt that mobile payments are fundamentally safe and convenient, but since most Americans feel the transactions are risky, the likelihood of stifling regulation is increased. It is a regulatory environment that has resulted in a place like Kenya leading the U.S. in mobile payment penetration. Congress is still working out who will regulate mobile payments, according to Jackie Moran, vice president at Verizon Inc.

“Congressmen are often uncomfortable with the technology,” said Tucker Foote, vice president and head of U.S. Government Affairs for MasterCard. This lack of knowledge could lead to more stringent and over-reactive legislation from politicians. “They’re scared,” Foote added.

More regulation will come as the government becomes aware of how the mobile payment industry operates. But, they might show some misguided zealotry in the name of protecting consumers, Moran said. Consumers are concerned about having their phones hacked, but the industry views mobile phones as more secure, said Moran. Congress is concerned about privacy issues and civil liberty concerns and might issue more regulations. Nevertheless, mobile phones are going to become widely used.