As a Product Manager at Bankers Trust in 1996, I recall the time when an analyst called me to discuss the growing role and potential for the “Internet” in Cash Management and Treasury Services. The basic response I provided was that the internet was simply another way to communicate and disseminate information, and that payments are information. As time would pass, I said, the technologies would improve, the security would improve, and I believed that one day, almost all banking and payments functions could be done over the internet. This turned out to largely be true.
However, the next question the analyst posed was more perplexing: What laws, rules and regulations applied? For this, I did not have a great answer. I defaulted to the standard spiel about service contracts for the internet part, after which all the traditional laws and rules would apply. By and large, this was correct, but certainly left much room for debate and needed clarification.
Here we are, 15 years later, and we see much of the same types of evolution happening again – with the same types of questions. This time, the subject of debate are mobile payments services and “cloud” services. Again, my first answer would be largely the same. Yet again, the legal and regulatory issues are not entirely clear.
What sparked this post was the work we’ve been doing related to Mobile RDC (and the amazing adoption rates and results we’re seeing in the industry – View Webinar), and three article and news releases from reputable companies or publications which all seemed to conflict to some degree:
This time, things might (or might not) be more complicated. Again, we’re talking about the ability to communicate and disseminate information. Whether that is done via a hard-lined telephone, fax, the internet or mobile phone, the core premise is the same, the payment products are the same (aren’t they?) and it really shouldn’t matter how the information is communicated as long as it is accurate, right? Personally, I see mobile payment services in the same light as online banking in the early-to-mid 1990s: many grey areas, lots of skeptics, a bit of hype, but a clear trajectory towards mainstream adoption.
Perhaps the biggest change in the past 15 years has been the rise of non-bank payment providers who play an increasingly important and growing role in how payments get done. A growing number of individuals and even businesses are more “distant” from their financial institution than ever before. Even at the RDC Summit 2011, there is a session focused upon Remote Deposit Capture for the unbanked and under-banked. For some, their “bank account” is now a prepaid card or an “online account” with a non-bank provider. Another example, at least within the RDC Industry, is the growing use of third-party intermediaries by businesses for a “bank agnostic” RDC solution where the service provider cleared deposits on their customer’s behalf, then credits the amount of the deposit to their customer’s bank account via EFT.
So, a few questions for the industry:
1. How important are Mobile Payment Services to your organization?
2. What laws, rules and regulations apply to Mobile payments services?
3. Which ones should apply?
4. What is missing?
5. –And if we could start from scratch, what might an ideal solution be?
We’re looking forward to your comments.