Apple Pay and the Road to Regulation

Tech-tablet

As the dust begins to settle around the launch of Apple Pay we can now step back and take a look at the initial impact of the mobile payment technology. Let’s first note that Apple Pay is not the first entrant into the mobile payments market. Google Wallet, Square, Pay Pal, and a number of others came before Apple Pay. What made Apple Pay different was that it instantly put mobile payments into the hands of over 70 million IPhone 6 owners, thus bringing a certain sense of ubiquity to the market. Now, the question we find ourselves asking is when/if regulators will step in?

With a spate of large scale data breaches over the past year, Apple Pay and other mobile payments options have been offered up as part of the solution towards protecting payments. However, consumers and regulators alike have, in the past, been wary of mobile payments. A survey by CreditCards.com conducted in September 2014 asked consumers if they would use their phones to pay for items if they could, 44 percent of respondents said they never would, while 18 percent said “hardly ever.” Just 4 percent said they would always use phones as a method of payment, with 9 percent saying they would most of the time. These numbers are in line with what happened on Black Friday last year. According to a survey conducted by InfoScout, more than 95 percent of iPhone 6 and 6+ users who could have paid with Apple Pay on Black Friday chose not to.

On the merchant side, an online research firm comScore, found that only about 220,000 U.S. retailers have the capacity to handle NFC, the technology that allows smartphones or similar devices to establish contact and conduct a transaction by touching or being brought in close proximity to each other. That’s 220,000 out of a universe of some 9 million merchants.

While these numbers show that consumer interest in mobile payment is currently lacking, it hasn’t stopped Congress from beginning to investigate mobile payments and their capacity to regulate them. For example, the Senate Banking Committee held a hearing in December on cybersecurity. In Chairman Tim Johnson’s (D-SD) opening remarks he noted that “Safeguarding cyberspace has become increasingly complex as our lives become more entwined with technology.  Technological innovation in financial services, such as mobile payments, peer-to-peer lending, and cloud computing, can facilitate improvements in the consumer experience and economic growth.  However, these innovations highlight the crucial need for sound cybersecurity policy, as many of these products are outside of the regulated financial sector.”

Consumers, Congress, and merchants may not be totally on board with mobile payments yet, but they are starting to think about them, test them out and we are starting to see early adopters. There is no doubt that this technology will start to impact the way we pay for things in the coming years and regulators will certainly continue to take notice and try to preempt potential issues through regulation.

 

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Financial Services

Apple Pay and the Road to Regulation

Tech-tablet

As the dust begins to settle around the launch of Apple Pay we can now step back and take a look at the initial impact of the mobile payment technology. Let’s first note that Apple Pay is not the first entrant into the mobile payments market. Google Wallet, Square, Pay Pal, and a number of others came before Apple Pay. What made Apple Pay different was that it instantly put mobile payments into the hands of over 70 million IPhone 6 owners, thus bringing a certain sense of ubiquity to the market. Now, the question we find ourselves asking is when/if regulators will step in?
With a spate of large scale data breaches over the past year, Apple Pay and other …

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Financial Services

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