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Table of Contents

Lead Story

Size matters with big data


Industry Update

AmEx joins EMV push

Congress urged not to stifle mobile innovation

Google makes Wallet changes

New Zeus malware puts payments at risk


GS Advisory Board:
New times, new strategies: What are you doing?

Details on big data

Selling Prepaid

Prepaid in brief

Prepaid EMV reaches U.S. shores

Rev takes off where Square left off


When mobile meets RDC

Patti Murphy
ProScribes Inc.


Street SmartsSM:
Why should a merchant be fired?

Jeff Fortney
Clearent LLC

Cooperation, social strategies combat fraud

Nicholas Cucci
Network Merchants Inc.

Five ways to fix your marketing problems

Nancy Drexler
President, Acquired Marketing

Reach your company's peak performance with training

Alan Kleinman
Meritus Payment Solutions

Spotting unlikely service providers in your midst

Chris Bucolo

Company Profile

Ingenico Inc.

New Products

Table for two, please

Harbortouch Reservations

A mobile-friendly website

Paynet Systems mobile website
Paynet Systems Inc.


Give yourself a break, a long break



Resource Guide


A Bigger Thing

The Green Sheet Online Edition

July 23, 2012  •  Issue 12:07:02

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Congress urged not to stifle mobile innovation

The Electronic Transactions Association issued a statement June 29, 2012, urging Congress to be cautious when considering mobile payments regulation.

The statement was released in conjunction with the House Financial Services Committee's Subcommittee on Financial Institutions and Consumer Credit hearing on "The Future of Money: Where Do Mobile Payments Fit in the Current Regulatory Structure?"

Jason Oxman, ETA Chief Executive Officer, said "We urge Congress to take care to avoid regulation that could stifle the innovation that gave birth to mobile commerce and will drive its future growth."

Law enforcement offers perspective

The subcommittee heard testimony from two witnesses, James H. Freis Jr., Director of the Financial Crimes Enforcement Network (FinCEN) of the United States Department of the Treasury and Stephanie Martin, Associate General Counsel for the Board of Governors of the Federal Reserve System.

Freis said mobile payments are regulated by FinCEN under anti-money laundering and counter-terrorist financing laws and rules. However, more regulation may be needed. Freis testified that a 2008 study from The World Bank, Integrity in Mobile Phone Financial Services: Measures for Mitigating Risks from Money Laundering and Terrorist Financing, maps out a good approach to regulating the various roles found in mobile financial transactions.

"FinCEN's regulations take a comprehensive approach in this area, focusing more on the activity at issue as opposed to the particular electronic communication vehicle," Freis testified. He said any business participating in transactions involving the transfer of "currency, funds, or other value that substitutes for currency" from one entity to another is considered a money services business subject to FinCEN regulation - no matter how small the amount transferred. This applies to prepaid transactions also.

Freis said FinCEN is noticing "an interesting trend in the mobile payments industry where different telecommunication systems and/or financial mechanisms may merge and become interwoven in the same overall mobile payments transaction." He concluded FinCEN regulations covering prepaid access and money transmission can apply to the participants in mobile payments depending on the business model being used. He told the subcommittee FinCEN is charting a course that "helps financial services providers to focus on serving their customers, not criminals."

Federal Reserve talks regulation

The Federal Reserve's Martin said regulators must ensure consumers are protected from unauthorized transactions, theft of confidential payment information or personal identification data, and other such threats. In many cases these problems arise because payment laws are outdated having been enacted well before mobile payments were even imagined. "Those laws may not be well-tailored to address the full range of mobile payment services," Martin testified.

Martin also told the subcommittee that using new communication channels for payment "generally does not result in changes to the basic rights afforded to consumers" or "to a bank's responsibility to ensure the security of that communication channel." However, she cautioned that making payments through nontraditional arrangements, such as settling payments as part of a telephone company bill, "may change the legal protections related to the purchase, depending on the details of the arrangement and the applicable federal or state statutes and rules."

A legal framework regulating mobile payment services provided by financial institutions already exists under the Electronic Fund Transfer Act and other regulations, Martin said. These regulations also cover prepaid mobile services and are enforced through the rulemaking and interpretive authority of the Consumer Financial Protection Bureau.

The application of regulation to nonbanks depends on the nonbank's role in the transaction, Martin noted. "A nonbank can have a more independent role, such as a manager of a prepaid value program, a money transmitter or a telephone company that bills customers for payment transactions," she said. "In these cases, it is necessary to examine the specific provisions of law to determine their applicability to the nonbank's particular role in the transaction."

Martin said it is difficult to make broad generalizations about the applicability of current regulation to mobile payments due to the different types of service providers (bank and nonbank) and the wide variety of payment arrangements available and under development.

"Further analysis of existing laws may be needed to ensure that consumers are adequately protected," she testified. Martin called for more fact-finding and analysis to be sure any new regulation does not "stifle the very innovations that would benefit consumers overall."

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Spotlight Innovators:

North American Bancard | Simpay | USAePay | Impact Paysystems | Board Studios