2012-01-23-奥纬咨询-The_Regulation_of_Traditional_and_Alternative_Electronic_Payments_100页_1mb

Analysis and Summary of Financial Services Regulation for Traditional and Alternative Electronic Payments

The paper examines the regulatory gap between traditional and alternative electronic payments in the US, noting that while traditional markets are well-regulated, the rise of alternatives like PayPal, mobile payments, and virtual currencies has created ambiguity. Key points include:

Key Findings

1. Regulatory Lag: Traditional payment regulations were designed for cash, checks, and traditional electronic systems (credit/debit, ACH). They haven't kept pace with innovations like alternative electronic payments (AEP), resulting in uneven consumer protection.

2. Level Playing Field Need: A modernized, consistent regulatory framework is needed across all payment methods to enhance consumer protection, maintain payment system safety, and promote fair competition.

3. Taxonomy: Alternative AEP is categorized into five types based on regulatory perspective:

   Category	Description
   Traditional Payment Facilitators	Operate existing systems (credit, debit, ACH) with innovations to make them easier/smoother; generally not subject to regulatory gaps mentioned elsewhere.
   New Plastic	Companies using physical plastic (GPRL cards, gift cards, etc.) but with distinct regulatory treatment from traditional debit cards.
   Non-Plastic Asset Accounts	Hold customer funds in non-traditional accounts for P2P/P2M transactions (like PayPal alternatives). Ambiguous status regarding EFTA and Regulation E coverage.
   Mobile Carrier Billers	Charge directly to mobile phone bills; do not hold customer funds, so certain consumer protection laws don't apply.
   Virtual Currencies	Providers like Facebook Credits where users exchange dollars for points to buy virtual goods; raises fundamental questions about financial regulation boundaries and ambiguity.

4. Regulatory Gaps: Gaps exist in:

   • Consumer Protection: Different payment methods receive varying levels of protection (overdraft fees, dispute resolution, funds availability, bankruptcy, deposit insurance, UDAP).
   • Payments-Specific Regulations: Differences exist in ACH, debit interchange (Durbin Amendment), payment card reporting (3091), AML/KYC/MSB regulation, tying arrangements/Reg Y.
   • Depository Regulation: This comprehensive regime creates significant burdens unique to banks (examinations, capital requirements, reporting, enforcement) not shared by alternatives.

5. Recent Regulatory Changes:

   • Overdraft Changes (Reg E): New consent rules for ATM/POS overdrafts.
   • Credit CARD Act: TILA expansion limiting fees, interest rate changes, payment application order.
   • Check Clearing: Increased scrutiny and regulations regarding check processing order.
   • Dodd-Frank/Durbin Amendment: Limits on large bank debit card interchange fees.
   • Payment Card IRS Reporting (3091): Requires reporting of merchant payment volumes (impacts alternative networks).
   • KYC/AML: Baseline for stored-value/prepaid cards via FinCEN rules.

Answers

1. Why Re-examining Law is Due: Rapid growth and innovation in alternative payments mean existing laws are outdated and create non-transparent regulations, impacting consumer trust and competitiveness.
2. Achieving Level Playing Field: Requires modernizing laws to address new technology and business models within existing consumer-protection frameworks.
3. Regulatory Ambiguity: Can be exploited for uncompetitive practices or consumer harm (e.g., discriminatory premium finance rates, unregulated data handling by FinTech companies, lack of escheat policies).
4. Importance of Regulatory Framework Consolidation: Consolidating regulation and setting clear rules is crucial.

Conclusion

A modernized regulatory framework is necessary to protect consumers, ensure payment system safety, and support future innovation in financial services, addressing the significant gaps between traditional and alternative payment systems.