In 2011, the technology world was all abuzz with news of a new payment system which could turn your smartphone into a virtual wallet. Google was the first to come forward with their Google Wallet and they partnered with Visa and MasterCard to produce Near Field Communication (NFC) systems in a limited number of smartphones.
With this new technology, people could pay for goods and services simply by swiping their smartphone by a point of sale device, or POS.
This made quite a few people nervous.
NFC was being debated by experts across many fields. How would the information be kept safe as it traveled from mobile device to the point of purchase? How safe was a bank account that could be drained through a stolen device? There were these question and many, many more. There were those who said it was not safe and those who stated that it was just as safe, if not safer, than carrying around a regular wallet.
That was 2011. It is now 2013 in a world where 2 years seems like a millennia when it comes to technology advancements.
More merchants, mobile manufacturers, and financial institutions are now supporting this new technology, which has brought it to the attention of the Federal Deposit Insurance Corporation (FDIC). The report, which was released on January 3, 2013, was aptly titled “Mobile Payments: An Evolving Landscape.”
The report shows that the field of mobile payment systems is growing. Not only are more businesses getting on board with the new technology, but the amount of smartphone owners is increasing. This is creating a market ripe for consumers who can make mobile payments and business that can receive mobile payments. In addition to the two original credit card companies, American Express and Discover have joined the group of credit granting institutions who participate in mobile payment methods.
Because the review was done by the FDIC, there are sections of the review that dip into laws and regulations that an everyday consumer will not be concerned with. However, if you enjoy dissection laws and regulations dealing with anti-money laundering and the like, you will enjoy the FDIC’s breakdown of each act, law or regulation that is applicable to the mobile payment system industry.
The review outlines seven different fields which must be monitored by financial institutions. One of those is fraud, which is our area of concern. The recommendations of the FDIC are that banks “ensure adequate security of account data and other sensitive information” in order to protect consumers against fraud.
An interesting point is made that many banks are already compliant with mobile payment systems because of the fact that a consumer will need a bank account in order to load their mobile device with funds. The FDIC concludes that the mobile payment industry will continue to grow and become a larger percentage of payment processing for consumers in the future.
They also state that everyone involved in the transactions will need to continually evolve their security and best practices to avoid fraud and protect both consumers and institutions.
The publication is available on the FDIC’s website here for further reading.