MOBILE PAYMENTS LEGAL AND REGULATORY SURVEY

Transcription

1 MOBILE PAYMENTS LEGAL AND REGULATORY SURVEY Summary and Analysis by: Stephen T. Middlebrook Co-Chair, Electronic Payments and Financial Services Subcommittee, Cyberspace Law Committee, American Bar Association Survey Overview Survey Purpose: To survey payment lawyers and professionals regarding their views of the current legal and regulatory climate affecting mobile payments. Survey Audience: The survey was sent to members of the payments subcommittees of the Cyberpsace, Banking, Uniform Commercial Code and Credit Union committees of the Business Law Section of the American Bar Association, and to members of BayPay, a group of Bay Area Payment Professionals. The survey was conducted during July 2010 and 87 people responded. Survey Highlights: Eighty four percent of respondent felt it is difficult or very difficult to identify the laws and regulations which govern mobile payments. Seventy eight percent of respondents felt it will be difficult or very difficult to resolve the legal issues which surround mobile payments. Ninety two percent of respondents would rate legislators and regulator s level of understanding of how mobile payments work as poor or very poor. Respondents felt the lack of business models that benefits all key parties is the most significant factor contributing to the failure of mobile payments in the United States. This factor is followed closely by the inability of key parties to work together, the sufficiency of current payment methods, and the lack of industry-wide technical standards. Respondents felt that a retail purchase initiated by RFID/NFC chip or sticker is the mobile payments business model most likely to see significant consumer adoption in the United States in the near future. The next most likely business model to see widespread adoption is merchant card acceptance via mobile phone. Respondents felt that providing a high quality, easy to use software interface and creating a product for which there is sufficient consumer demand are the most important factors contributing to the success of a mobile payment product.. Respondents reported that financial institutions and mobile carriers are the entities whose participation is the most important to the success of a mobile payments product.

2 Survey Results Of which group(s) are you a member? 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% BayPay American Bar Association Neither / Other Please rate the importance of each of the following factors in contributing to the failure of mobile payments to become widely adopted in the United States. Average response using a scale of 1 to 5 where 1 = not important and 5 = extremely important. Sufficiency of current methods Consumer fears about privacy Lack of merchant interest Insufficient investment Inability to work together Lack of business model Overabundance of regulation Difficulty enrolling participants Lack of technology standards Lack of clear regulatory framework Weak consumer demand Mobile Payments Legal and Regulatory Survey Page 2

3 Which of the following "use cases" for mobile payments do you think is most likely to see significant consumer adoption in the United States in the near future? Merchant card acceptance via mobile 15% Other 7% Person-to-person transfers 16% Social website purchases 12% RFID/NFC chip or sticker 33% ecommerce via text message 4% Card to card via mobile phone 7% Retail purchase via 2D bar code 6% Please rate how important each of the following attributes will be to the success of companies pursuing the mobile payments use case you selected in question (3). Average response - scale of 1 to 5 where 1 = not important and 5 = extremely important. Embedding mobile payments into social media Incorporating mobile payments into consumer's existing banking relationships Creating a product that spans the web, mobile and face-to-face environments Convincing consumers that their personal information will be kept private Creating a product for which there is sufficient consumer demand. Designing a high quality, easy to use software interface Mobile Payments Legal and Regulatory Survey Page 3

4 Please rate how important the support and participation of the following entities will be to the success of the mobile payments use case you selected in question (3). Average response using scale where 1 = not important and 5 = extremely important. Social Media websites Retail websites Brick and mortar retailers Mobile OS designers Mobile device manufacturers Credit and debit card networks Mobile/internet payment providers Application developers Mobile carriers Financial institutions How difficult do you feel it is to identify the laws and regulations which govern mobile payments? It's very easy. 3% It's very difficult. 23% It's somewhat easy. 13% It's somewhat difficult. 61% Mobile Payments Legal and Regulatory Survey Page 4

5 Please rate how difficult you feel it is for companies pursuing the mobile payments use case you selected to identify each of the following legal and compliance goals. Please use a scale of 1 to 5 where 1 = extremely easy and 5 = extremely difficult Licensing requirements Anti-money laundering standards and requirements Privacy standards and requirements Liability rules for lost, stolen or fraudulent payments Data security standards and requirements Consumer protection standards and requirements How difficult do you feel it will be overall to resolve the legal issues that surround mobile payments? It will be very difficult., 11.9% It will be very easy., 0.0% It will be somewhat easy., 22.6% It will be somewhat difficult., 65.5% Mobile Payments Legal and Regulatory Survey Page 5

6 Please rate how difficult it is for mobile payments companies to identify the legal rules governing and achieve compliance in each of the following areas. Average response using a scale where 1 = extremely easy and 5 = extremely difficult Licensing requirements Anti-money laundering standards and requirements Privacy standards and requirements Liability rules for lost, stolen or fraudulent payments Data security standards and requirements Consumer protection standards and requirements Identify Achieve How would you rate the level of understanding that legislators and regulators have of the way mobile payments work? Very good 0% Very Poor 45% Good 1% Satisfactory 7% Poor 47% Mobile Payments Legal and Regulatory Survey Page 6