[1] BTN: How was the task force put together?
Plagge: My interest in the payments system goes back ten years, when I served on the Chicago Fed Board, back when check processing centers were starting to unwind and we started seeing the movement to debit.
I thought the changes were rapid back then, but that was nothing compared to what's going on today. With the task force, we tried to find a group of bankers that had a significant interest in the payments system and that represented different bank sizes.
[2] Is the pace of change a concern?
Plagge: You could have a full time job simply reading articles on mobile payment and mobile wallets. It's a central part of our focus, we're watching how mobile wallets develop from an operational standpoint.
[3] Is the task force particularly interested in the many emerging schemes for mobile wallets?
Plagge: You have a lot of players trying to figure out that market, there are big names like Apple and PayPal starting new products. There's a big question of interoperability [among providers]. At what point do all of these dots start connecting?
There is also a question of security. We have an interest in these systems being built around structures that are already in the payments system [using bank-led processing], rather than creating something that exists outside of the banking system. We want to make sure the new payments ecosystem is accessible, that when consumers access it they can trust that it's a safe venue.
[4] Have you take a position on the preferred form of near field communication (NFC) for contactless payments?
Plagge: We don't have a position on the technology. At the end of the day there is going to be money coming out of one account and going to another account. We want it to be a secure channel.
[5] Is that an advocacy for bank-led processing over alternative methods from retailers or startups?
Plagge: On the banking side, there are rules about settlement and credits...keeping contactless payments in the bank space keeps the processing on bank rails, and it keeps the Fed policy behind the settlement.
If those entities aren't subject to FDIC oversight, not to be a 'chicken little' but there is a possibility for some awkward and uncomfortable transactions if a non-bank takes the lead and something goes wrong with the payment.
