Fed Paper Details Pros, Cons of Mobile for Merchants

June 2, 2014

Fed Paper Details Pros, Cons of Mobile for Merchants Late last week, the Federal Reserve Bank of Kansas City released a report detailing the state of mobile payments in the U.S. and how increasing adoption is affecting merchants, positively and negatively. The article, authored by senior Fed economist Fumiko Hayashi, notes that although consumer adoption in the U.S. has been disappointing, new technologies have improved the outlook, so more merchants are developing and implementing mobile payment strategies.

The Fed report said mobile has two attributes with clear effects on merchants: the customer shopping experience will be enhanced and the current fragmentation of the market will ensure that the investment required will be difficult and expensive. What isn’t so clear about mobile, the report said, is whether merchants will reap any savings from reduced processing costs, to what extent mobile will affect how they control customer data and how data security is affected.

“Mitigating uncertainty about customer data ownership, data security, and consumer privacy is a necessary step toward mobile payment acceptance by merchants as well as adoption by consumers,” the report concluded. “A viable solution could be setting standards—including effective enforcement—for ownership and security of customer data and consumer privacy, which could be achieved by the industry alone or may require government involvement.”