Statement for the Record to the Task Force on Financial Technology regarding: Is Cash Still King? Reviewing the Rise of Mobile Payments.

The American Bankers Association (ABA) appreciates the opportunity to submit a statement for the record for the hearing titled “Is Cash Still King? Reviewing the Rise of Mobile Payments.” We begin our comments by sharing overarching observations about the state of payments in America.

Innovation Pays: America’s Payment System is Working

Americans are rapidly embracing new payments technology that meets them where and how they live in this new decade. Mobile telephones, voice assistants, and wearables have brought financial services from the teller line and desktop computer to the pockets and wrists of consumers. Untold new small businesses have come into being because of mobile phone‐based card acceptance solutions. Contactless cards and mobile devices are speeding up turnstiles on the nation’s subways. From government benefit cards accepted anywhere to remote check deposits, banks are making payments more inclusive. Increasingly, transactions happen within apps and online, without any physical payment credential being tendered.

In a recent Morning Consult poll, 95% of adults rated their banks’ online and mobile app experience as “good” to “excellent.” Further, 77% reported that recent tech improvements delivered by their bank is making it easier to access financial services. This month, a report from a merchant tech provider found that 84% of business locations accept contactless payments, yet only 4% of consumers describe digital wallets as their preferred form of payment, with contactless cards at 11%. Still, nearly three‐quarters of consumers say that contactless payment types are convenient and easy to learn. Banks issued tens of millions of contactless cards in 2019 and we expect that 2020 will be the year when they reach virtually all cardholders, providing a familiar, battery‐free entry point to contactless payments for many consumers.

Will Tomorrow’s Payments Be a Step Forward or Backwards?

New payments options are being broadly adopted in our society. But this revolution is underpinned by technology which, while ubiquitous, may not be available in the same way to all consumers. Questions of equity and access have rightfully been raised for answer by the technology sector, merchants, and financial services companies. While ABA has long promoted pro‐consumer policies in this space, it is not preordained that mobile payments will provide the kind of benefits of which they are capable – poor policy choices and inconsistent consumer protections could sell these advances short.

Mobile Payments Should Bring High‐Quality Banking Services to More Americans

The increasing use of mobile payments can be a force for good. The path that policymakers take will determine whether innovations foster inclusion or foment exclusion, deliver benefits broadly to consumers or dilute protections currently owed to them, promote competition or consolidate the payments marketplace into the control of a handful of powerful technology platforms. True innovations deliver the same or better service in new ways rather than lowering existing standards.

Regardless of the Future of Cash, More Access to Electronic Payments is Key

More than virtually any sector, banks are in the cash business – it is merchants, however, who decide which forms of payment they will accept. Cashless policies matter most when there is not adequate access to electronic payments – one strategy to mitigate underlying cash policy concerns is to work together to grow banking options for the underbanked. In the age of in‐app payments, it is possible that access to electronic payment tools like debit cards and payment apps may become as important as basic internet access was at the height of the “digital divide.” Unfortunately, access to basic banking accounts and debit cards has been reduced by the archaic and obsolete Durbin Amendment, pushing some consumers to inferior financial services options that are not readily loadable into mobile payment apps. Repealing the Durbin Amendment would allow more people to qualify for free or low‐cost, high‐quality deposit accounts that support mobile payments. This increased access would reduce the impact of cashless policies chosen by merchants.

Download the statement to read the full text.

For further information on the issues in this testimony, please contact Brian Murphy.