The success of mobile payments in the US depends on an open, interoperable infrastructure based on near field communications technology, according to a paper published by the Atlanta and Boston Federal Reserve Banks.
The paper, drafted by the banks' research teams following the creation of a mobile payments industry workgroup, sets out what they call the "foundational components" for an m-payments environment defined as an "open mobile wallet".
The authors say this would likely be based on contactless technology in smartphones and payment terminals and tap existing rails such as the ACH network. They also stress that some form of dynamic data authentication would be at the heart of a security and fraud mitigation program.
Standards would be designed, adopted, and complied with through an industry certification program to ensure both domestic and global interoperability, including a standard to ensure that devices used for mobile payments do not create any electronic interference problems.
Meanwhile, a "better understanding of a regulatory oversight model should be developed in concert with bank and non-bank regulators early in the effort". Trusted Service Managers should oversee the provision of interoperable and shared security elements used in the phone.
However, the group pulled short of recommending a specific industry "roadmap", deciding complexity of the environment and diversity of participants could stifle innovation.
With banks, card firms, telcos, handset manufacturers, retailers, processors and technology providers all bidding to cash in on a potentially huge market, the issue of interoperability is key.
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