Mobile Payments: The Challenge of Protecting Consumers and Innovation

10 Privacy & Security Law Report 212, reprinted in 75 United States Law Week 2095 (Mar. 15, 2011)

5 Pages Posted: 24 Apr 2014 Last revised: 11 Feb 2017

See all articles by Elizabeth Eraker

Elizabeth Eraker

University of California, Berkeley - School of Law

Colin Hector

University of California, Berkeley - School of Law

Chris Jay Hoofnagle

University of California, Berkeley - School of Law; University of California, Berkeley - School of Information

Date Written: February 7, 2011

Abstract

The ubiquity of mobile phones has long promised to spell the success of mobile payment platforms — a world in which the phone is a universal currency and no one needs plastic. While such predictions have proven mostly fruitless in the past, there is increasing evidence that the next few years may bring a fundamental shift towards mobile payment systems.

The emergence of mobile payments promises substantial benefits for consumers. In the developed world, where the market for mobile telephony is mature, mobile payment systems have the potential to upset the existing balance between merchants and payment companies and provide new conveniences to consumers. For instance, m-payments may give merchants more ability to interact directly with the consumer, through in-store promotions and rewards that are delivered directly to the mobile device. In developing countries, the explosive growth of mobile payment systems demonstrates the potential for such systems to transition unbanked and poor communities into mainstream financial services.

Along with the hype accompanying this trend, some caution may be warranted. The shift to mobile payments has enormous implications for privacy, as unregulated entities, or businesses traditionally regulated under some other sectoral scheme, such as telecommunications, will have access to increasing amounts of financial and transactional data once only held by banks and transaction processors. In addition, regulators charged with overseeing mobile payment platforms face the challenge of identifying a framework that effectively regulates nonbank entities — ones without the culture or deep experience with security found in other sectors — that are nevertheless offering financial services bordering on those provided by traditional banking institutions.

Ensuring an adequate level of consumer safeguards while allowing for experimentation and innovation in a burgeoning industry was the topic of a conference that we helped organized with colleagues from the University of Washington School of Law entitled, Mobile Payments: Global Markets, Empowered Consumers and New Rules? This article summarizes the consumer protection and innovation issues raised by mobile payments and discussed at the conference.

Keywords: digital wallet

Suggested Citation

Eraker, Elizabeth and Hector, Colin and Hoofnagle, Chris Jay, Mobile Payments: The Challenge of Protecting Consumers and Innovation (February 7, 2011). 10 Privacy & Security Law Report 212, reprinted in 75 United States Law Week 2095 (Mar. 15, 2011), Available at SSRN: https://ssrn.com/abstract=2428175

Elizabeth Eraker

University of California, Berkeley - School of Law ( email )

215 Boalt Hall
Berkeley, CA 94720-7200
United States

Colin Hector

University of California, Berkeley - School of Law ( email )

215 Boalt Hall
Berkeley, CA 94720-7200
United States

Chris Jay Hoofnagle (Contact Author)

University of California, Berkeley - School of Law ( email )

341 Berkeley Law Building
Berkeley, CA 94720-7200
United States
‭(510) 666-3783‬ (Phone)

HOME PAGE: http://hoofnagle.berkeley.edu

University of California, Berkeley - School of Information ( email )

212 South Hall
Berkeley, CA 94720-4600
United States
510-643-0213 (Phone)

HOME PAGE: http://hoofnagle.berkeley.edu

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