In Conversation: ABA Payment Task Force to Refresh Mobile Guidance

It’s raining mobile payments talk, and the American Bankers Association hopes to offer its members an umbrella for the storm with insights from its Payments Systems Task Force that was officially announced last month.

Bank Innovation caught up today with two of the Task Forces’ executives to discover the group’s objectives, which center on banks of all sizes striving to develop strategies to ensure a strong, safe and efficient payments market where they remain competitive.

Jeff Plagge, ABA vice chairman and president of Arnolds Park, Iowa-based Northwest Financial Corp., is the leader of the Task Force, and tells Bank Innovation that guidance and assistance to ABA member banks on what the best mobile banking platforms are as well as providing them with a better understanding of payment platforms are near-term objectives of the Task Force.

The majority of ABA members are banks with less than $165 million in assets.

“We are all watching all of this – bank players and non-bank players – it’s a good time to refresh our standards,” Plagge tells Bank Innovation. “We will have some targets by fall to have some guidance documents developed. …It’s one of the hottest topics”

The Task Force members come together monthly for conference calls to discuss the evolution of payments.

Keeping abreast of changes in technology, and in turn banking customer expectations, is no simple task, but Plagge says that mobile banking has been evolving from information-type services to also including transaction functionalities, which raises the stakes for banks nationwide.

One challenge unique to smaller institutions, though, is that they are reliant on their vendors’ ability to innovate.

“Many community banks are tied to their core providers,” says Plagge, adding that leading vendors have been nimble to innovating efforts. “Cores are recognizing that they can’t sit back and watch.”

What the Task Force is not focusing on, though, is which player is leading the payments pack.

“We are not here to think about winners and losers,” Plagge says. “We are here to see how it all comes together. …We don’t want forced regulation.”

Even so, Plagge touts the benefits of payments that run through the banking rails as existing rules govern their disputes, for example. Though consumers love “fast and easy” transactions, the moment consumers lose money from the transaction is the moment they will realize proper dispute handling matters more than speed, he says.

But before mobile payments become commonplace in America, payment players need to become interoperable.

“Right now, it’s a fractured system,” says Plagge.

“We are in very early days of that,” adds Steve Kenneally, vice president of payments and technology policy of ABA. “We have more PR than transactions.”

One reason there haven’t been more developments in mobile payments usage is because Americans like the payment forms that already exist, says Kenneally.

“Ironically, one of the things hindering new payments technology is that the existing payment system works so well,” Kenneally tells Bank Innovation. In order to persuade consumers to ease off their plastic card and cash habits, players will need to build “nice mousetraps,” he says.

“It’s a new and exciting time in payments,” says Kenneally. “It will be a little while to see what shakes out, but that’s what makes competition good.