Mobile Payment Sphere Loaded with Challenges of Tech, Culture, Says FCC CTO
Establishing a mutual agreement between payer and payee is “much more cumbersome” without anything physical taking place, said FCC Chief Technology Officer Henning Schulzrinne. He said there are many challenges of both comfort level and technology in adopting mobile payments. Schulzrinne tied the burgeoning trend to several FCC proceedings and working groups, speaking Monday at a Law Seminars International mobile payments seminar.
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Schulzrinne said “errors of confusion” are possible in making mobile payments, citing purchaser, merchant and payment system concerns. Credential theft is possible, he said. Among security issues, snooping is a concern, but from a technology perspective, “that’s actually the easier part,” he said. Payments can no longer be viewed as isolated transactions but likely will intersect with other aspects of mobile data, with security and privacy concerns, he said. Encrypt all data end-to-end to avoid compromised infrastructure security, he said. In mobile payments, people can no longer assume the infrastructure itself is “trustworthy,” he said, referring to the more secure “hotspot 2.0” standard.
"We're seeing more phones that are coming at least equipped with” near field communication technology, said Federal Reserve Bank of Boston Vice President-Payment Strategies Group Marianne Crowe, saying more Internet purchases are made through phones and mobile apps. Consumer demand is low, but the Fed has been involved with a group of industry mobile stakeholders since 2010, she said. She pointed to the convergence of online, mobile and point-of-sale channels since 2010 as well as a greater emphasis on data ownership, especially as stakeholders discuss big data more.
"Competition is continuing to increase in this market,” Crowe said. “Even the merchants themselves have become more active in this field. … A big focus this year is on consumer adoption.”
"How do we deal with the fact that the smartphone has essentially become a mobile computer?” Schulzrinne asked. The FCC Technological Advisory Council made several recommendations about consumer education, malware and other infrastructural issues potentially relevant to the mobile payment sphere, he said. Schulzrinne emphasized the need to give consumers a sense of what to expect and what not to expect in this sphere. People worry a lot about what they don’t need to and vice versa, he said.
Schulzrinne criticized near field communication as “an older model,” in which there’s a need to ensure proximity of two to four inches. A newer model is to use payer location, in which location and data transmission are separated, he said. Location “will become increasingly important as a security mechanism,” he added: “You have now a much richer vector in fraud-related information” to leverage. He cited the FCC’s years of interest in location information, discussing its relevance to emergency communications. But he also pointed out how indoor location accuracy is not that great -- something the FCC has looked into.