Gerencia Payment

Mobile Payments in the United States
Mapping Out the Road Ahead

Darin Contini and Marianne Crowe, Federal Reserve Bank of Boston,
Cynthia Merritt and Richard Oliver, Federal Reserve Bank of Atlanta,
and Steve Mott, BetterBuyDesign

March 25, 2011

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The authors would like to thank the members of the MobilePayments Industry Workgroup for their valuable
contributions to the work effort and insightful ideas and comments that are the foundation of this paper. The views
expressed in this paper are solely those of the authors and do not reflect official positions of the Federal Reserve
Banks of Atlanta or Boston or the Federal Reserve System.

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I. Executive Summary
In January 2010, the FederalReserve Banks of Atlanta and Boston, through their Retail Payments
Risk Forum and Payments Research groups, convened a selected set of key players in this country’s
emerging mobile payments ecosystem. The goal of the meeting was to facilitate a discussion among all
involved parties as to how a successful mobile payments (as opposed to mobile banking) regimen could
evolve in the U.S.
Over the past15 months, the self-named Mobile Payments Industry Workgroup (MPIW) 1 met five
times to share information and ideas, discuss the barriers and opportunities resident in mobile payments,
and ultimately, to suggest a vision for the building blocks of an efficient and ubiquitous mobile payments
environment. Ultimately, the discussions of this group, along with additional industry dialogue andliterature research, constituted a body of input to the development of a research paper regarding the future
for point-of-sale (POS) mobile payments in the United States.
This paper, drafted by the Boston and Atlanta Reserve Bank payments research teams, does not
necessarily reflect the opinions of the Federal Reserve Banks, the opinion of the Federal Reserve Board of
Governors, or the opinion ofany individual member of the workgroup. Rather, the paper represents the
collective views of the authors based on the inputs noted above. The paper depicts the current mobile
payments ecosystem in the U.S.; discusses barriers, gaps, and opportunities; and sets forth a set of
foundational elements that workgroup participants believe are fundamental to the development of a robust
mobile paymentsenvironment. This “vision” for the future is built upon the recognition that the current
environment faces many challenges and that success will require extensive collaboration between
participants to ensure that consumers see a homogenous solution as they do today in other payment
channels such as checks, ACH, and cards. Moreover, it must be a solution based on agreed upon
standards, rules,and practices that ensure seamless interoperability regardless of the handset, mobile
carrier, financial institution, payment network, or merchant location involved in any individual’s desired
transaction.
The foundational components of success suggested by the work group include:
1. The proposed environment is best defined by the concept of an “open mobile wallet.”
2. The mobileinfrastructure would likely be based on Near Field Communications (NFC)
contactless technology resident in a smart phone and merchant terminals.

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Use of the MPIW in this paper represents the existing workgroup or a modified version of the group in the future.

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3. Ubiquitous platforms for mobile should leverage existing rails, including the ACH network for
non-card payments, and support newpayment types that meet emerging needs.
4. Some form of dynamic data authentication would be at the heart of a layered mobile payments
security and fraud mitigation program.
5. 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 to facilitate...