Submission Number: 561018-00012
Received: 2/27/2012 3:09:01 PM
Commenter: Maria Stephens
Organization: U.S. Agency for International Development
State: District of Columbia
Agency: Federal Trade Commission
Initiative: FTC To Host Workshop on Mobile Payments and Their Impact on Consumers, Project No. 124808
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The proposed FTC topics continue to underpin a lively ongoing discussion within the international development community related to the role of emerging payments systems--including, but not restricted to mobile financial services--within an emerging markets and global payments system context. Please see both the USAID-Booz Allen Hamilton Mobile Financial Services risk matrix, which I co-authored alongside other USAID and BAH subject matter experts, and the FRB/Atlanta paper written by cross-border payments risk subject matter expert, Cynthia Merritt. Both documents address many of the issues raised in the proposed FTC workshop question list. Please see this month's edition of the Banking and Finance Law Review for an article I wrote which addresses a range of issues specific to the risks associated with 'lightly' or unregulated mobile payments systems (document attached below).
Two overarching questions which have yet to be resolved in this discussion are as follows: first, when does a telecom-led product or service transition into a financial product or service that should subject itself to global Basel-based norms, standards, and national banking regulatory oversight and prudential supervision? Second, what is the impact of the 'commodidization' of airtime from both a monetary policy standpoint, and from an AML-CFT perspective? (Merritt's paper discusses this second issue.)
Another key issue to raise during the workshop pertains to the risks emerging from the increased tendency of donors, government entities, and private sectors entities to outsource key components of their mobile payments business models (data storage, payment clearance and settlement platforms) to third-party, 'cloud' or Internet-based service providers. Recent research undertaken through my office suggests that most Service Level Agreements are either opaque or silent on many of the direct and contingent liability risks brought about through such partnership constructs.
I would strongly recommend that FTC invite J. Chris Hoofnagle to participate in the workshop in light of the work he continues to lead through the UC-Berkeley law school focusing on privacy issues and data collection and storage. This work will only become more relevant to the discussion of consumer protection as Google and others continue to play a dominant role in the mobile 'space.'
Finally, I am leading research through my office on some of the unique issues facing visually impaired end-users of sight-dependent, SMS text-based mobile money transfer technologies, such as those provided through Safaricom/Kenya's M-Pesa products. Unless adaptive technologies and appropriate client protection support sytems are in place to accomodate the unique needs of such sub-populations, the current mobile money transfer technologies may actually be increasing the divide between those who can benefit from such technologies, and those who will be shut out from using such technologies.
Mobile Financial Services Risk Matrix
Developed in partnership between Kenya School of Monetary Studies, Nairobi, Kenya; U.S. Agency for International Development, Washington, D.C.; and Booz Allen Hamilton, McLean, VA (July 2010).
Mobile Money Transfer Services: The Next Phase in the Evolution in Person-to-Person Payments, by Cynthia Merritt, Retail Payments Risk Forum White Paper, Federal Reserve Bank of Atlanta. (August 2010).