CEO Perspective: The View From Washington

Jason Oxman
July 9, 2013 – We are in a time of tremendous change within our industry.  No component of the ecosystem has stood still – new competitors, new technologies, and shifting customer behaviors have all contributed to today’s dynamic landscape. Practically every week brings announcements of new product offerings, alliances between established and startup companies, or new projections for the growth of emerging technologies.

One of the main drivers behind this innovation is the growing mobile technology sector. The mobile world is expanding and innovating at a breathtaking speed. Consumers and merchants can do things that would have been hard to imagine only a few years ago. Most shoppers carry mobile devices everywhere they go and, increasingly, they are using those devices to redeem coupons, research products, and pay for things online and offline. The possibilities are exciting, but such profound changes don’t come without growing pains.

In recent years, lawmakers and regulators have begun voicing concerns about the volume of data that businesses are collecting, how that information is used and if it is sold, and whether consumers are given meaningful notice about those companies’ practices. Congress is considering 6 different bills that address wireless privacy issues.  For all the innovation in the mobile payments sector, there is little innovation in regulatory policies that govern it.

For example, the Do-Not-Track Online Act of 2013, introduced by Sen. Rockefeller (WV) last February, is well meaning but unfortunately proposes overreaching regulations that would threaten to stifle the very innovation that gave birth to mobile technology. The bill would require the Federal Trade Commission (FTC) to develop a new regulatory regime that requires web browsers to tell websites, advertising networks, data brokers and other online entities whether or not they can utilize consumer data.  This “Big Brother” system would also prevent online service provides to use any consumer information, even in providing services that the consumer was trying to use.

It is hard to imagine how this could be good for consumers. A wholesale opt-out could impede innovation and companies’ ability to individually tailor services to customers. Most consumers understand that information is used to deliver communications targeted to their interests. An overly broad do-not-track law would make it more difficult for companies to deliver targeted benefits such as loyalty rewards and coupons. As a result, consumers are likely to end up receiving a greater number of less-useful communications.

As technology and our economy evolve, our notion of the government’s role in technology needs to evolve as well. We must find ways to encourage new technologies and enterprises to ensure that the mobile payments revolution will realize its maximum potential. Beyond reforming our regulatory framework, legislators and regulators need to pursue broader pro-growth policies that will foster innovation and investment in the payments industry. We must ensure that outmoded regulations and unnecessary government interference do not impede growth or inhibit choices for consumers.
[spacer height=3] [divide] [spacer height=3] Jason Oxman is the CEO of the Electronic Transactions Association.