Risk of Bank Regulation Coverage Said to Spread with Digital Payment Technologies
Carriers and others involved in online and wireless payments risk regulation as banks, legal and industry experts said Tuesday. A rulemaking by the Treasury Department’s Financial Crimes Enforcement Network will be important in sorting out any reporting and credentialing requirements triggered by peer-to-peer mobile transfers using mobile applications, said Kate Kingberger, CTIA wireless Internet development director, on a webcast of the American Law Institute and the American Bar Association.
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There are open questions under the Credit Card Accountability Responsibility Act of 2009 about whether carrier products could come under rules for open-end consumer credit, and under the Electronic Fund Transfers Act and the FDIC’s Regulation E about whether carriers’ prepay and debit customers are covered by rules for consumer asset accounts, she said. And it’s not clear how mobile-initiated payments fit under the PIN-debit interchange fees provisions of the Durbin amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act, Kingberger said.
John Beaty of the Venable law firm called Dodd-Franks the “most dramatic” of the “new risks on the horizon.” Nonbanks using new digital technologies in financial transactions also could end up being regulated by states as money-service businesses for sending money between people, coming under the Bank Secret Act amendments in the Patriot Act, and being covered by Gramm-Leach-Bliley and the federal interagency guidelines establishing information security standards, he said. And the new Consumer Financial Protection Bureau has a broad charter, Beaty said. “It is still an open question as to how far they will reach and what they will do,” he said.
CTIA takes part in a broad Mobile Payments Working Group set up by the Federal Reserve Banks of Boston and Atlanta, Kingberger said. The group is working on an opinion paper, its second, concerning how Near Field Communication over mobile affects the payment and banking businesses, she said. The group, including 25 representatives of business, meets every other month, Kingberger said. Its “full commitment is to move the industry forward,” she said. “It’s not a competitive setting."
About a year ago, CTIA put out a list of best practices and guidelines on privacy, security, identification and fraud, to help sort out where liability rests in mobile financial transactions, Kingberger said. The association just checked back with members and was assured that the information still applies and no changes are needed yet, she said.