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Mobile Payments

Mobile

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Foster Innovation in Customer Experience

The NRF Retail Opportunity Index encourages Congress to foster innovation in customer experience by working with retailers to improve credit and debit card security through agreed-upon standards rather than bank-issued mandates, and to protect privacy while still being able to shoppers a customized and personalized experience online and in store. Learn more.

The Issue

With mobile representing a greater percentage of online shopping each year and smartphones increasingly used as payment devices for in-store purchases, lawmakers and federal agencies are beginning to investigate the regulation of mobile payments. Mobile could also be affected by consumer privacy legislation pending in Congress, and initiatives have been proposed that would limit retailers’ ability to improve the shopping experience by interacting with customers’ mobile devices in stores. For regulatory purposes, there is the question of what constitutes mobile – just mobile payments or also mobile shopping and ordering, and whether devices other than phones and tablets could be considered mobile. NRF believes mobile holds great promise for innovation, and that Washington should be careful not to place limits on that innovation or attempt to solve problems that do not exist.

Why It Matters to Retailers

A study released by NRF’s Shop.org group in 2013 found 34 percent of consumers had used a tablet to make a purchase and 21 percent had used a smartphone. Phones have since taken over in popularity, accounting for 17 percent of online sales in 2015 compared with 14 percent for tablets. Online purchases via smartphone are growing by 53 percent a year and 32 percent for tablets. Shop.org says mobile spending is expected to soar from $204 billion in 2014 to $626 billion in 2018, citing a forecast by Goldman Sachs. On Cyber Monday 2015, an estimated 29.6 million consumers representing 24 percent of the day’s shoppers used mobile devices, up from 3.7 million when NRF first tracked the number in 2009.

NRF Advocates on Mobile

NRF testified before the Federal Trade Commission, saying any rules governing mobile payments should parallel those for the underlying form of payment and not be specific to the technology. NRF emphasized that a smartphone or tablet is “just a device, not a payment,” with actual payments taking place via a credit or debit card, directly from a bank account or through the user’s phone bill. NRF does not want mobile payments to be routinely linked to the current credit card system, which would subject them to soaring swipe fees that have driven up consumer prices. While the ongoing implementation of chip-and-signature credit cards should help improve card security (especially if signatures are replaced with personal identification numbers), NRF believes the computing power of smartphones could provide an even more secure form of payment.