March 29th, 2012 at 22:12 UTC by Ross Anderson
I’ve just given a talk on Risk and privacy implications of consumer payment innovation (slides) at the Federal Reserve Bank’s payments conference. There are many more attendees this year; who’d have believed that payment systems would ever become sexy? Yet there’s a lot of innovation, and regulators are starting to wonder. Payment systems now contain many non-bank players, from insiders like First Data, FICO and Experian to service firms like PayPal and Google. I describe a number of competitive developments and argue that although fraud may increase, so will welfare, so there’s no reason to panic. For now, bank supervisors should work on collecting better fraud statistics, so that if there ever is a crisis the response can be well-informed.