FDIC to Banks: Watch Your Mobile Payments Partners 

Dec. 26, 2012

The Federal Deposit Insurance Corporation (FDIC), one of the primary regulators of state-chartered financial institutions in the U.S., published an article in the Winter 2012 edition of its Supervisory Insights , providing a comprehensive look at mobile payments. The article is agnostic on the question of prevailing technologies, describing the six most common (NFC, cloud-based, barcodes, direct-carrier billing, geolocation and P2P) and outlining regulatory risk inherent in each of them and the actual regulations applicable to different technologies. The piece is written from a banking perspective, detailing the trend of third parties assuming roles traditionally performed by banks and the risks accrued when that happens.

“The fundamentals of payments risk management should remain constant and, as emphasized in this article, banks offering mobile payments need to ensure compliance with existing laws and regulations,” the FDIC wrote in its conclusion. “This is particularly important when banks are working with non-bank third-party providers that may not be knowledgeable about the regulatory environment in which financial institutions operate. As a result, banks’ oversight of third-party relationships will become increasingly important as mobile payments evolve.”

For novices in the mobile payments world, the article is a good overview of the available technologies that will power mobile payments. To experts already providing those technologies and hoping to partner with a bank, the message is clear: expect a high level of scrutiny directed at your risk management practices.