New ABA Group Weighs in on Payments Maze; Argues Banks' Position against Startups

By Adams, John | American Banker, March 15, 2012 | Go to article overview

New ABA Group Weighs in on Payments Maze; Argues Banks' Position against Startups


Adams, John, American Banker


Byline: John Adams

As the payments landscape evolves to include more digital options such as NFC-driven contactless payments, the American Bankers Association has formed a task force to monitor and advocate for security, bank involvement and interoperability.

The group is pushing for standards that ensure a market that's as open as possible, yet maintains banks' position as primary processors of digital and mobile payments.

The task force will be chaired by Jeff Plagge, president of Northwest Financial Corp. of Arnolds Park, Iowa. Plagge and Steve Kenneally, vice president of the ABA Center for Regulatory Compliance, discussed the new task force this week in an interview with BTN.

The task force's members also include execs from Gulf Coast Bank and Trust Company, New Orleans;A Home Savings Bank, Kent, Ohio; Goodenow Bancorporation, Okoboji, Iowa; Firstrust Savings Bank, Conshohocken, Pa; First Bethany Bank & Trust, Bethany, Ok; American National Bankshares Inc., Danvile, Va; the Montana Bankers Association; and Sterling Savings Bank, Spokane, Wa.

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.

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.

Are there areas of interest for the task force regarding 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. 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 [bank-led processing], rather than creating something that exists outside of the banking system. …

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