5G, KYC-to-KYM and CCPA
Welcome to 2020, a flow of initialisms with a likely confluence of technology-driven mobile network expansion, uncharted regulatory waters and significant digital payment expansion opportunity as well as risk.
The fifth-generation mobile network (“5G”) is rolling out. Although, contrary to advertised claims, it will be a couple years before there is broad deployment and utilization. 1G brought us mobile voice communication – from Gordon Gekko’s Motorola DynaTAC to ‘flip phones’; 2G added texting; 3G advanced to basic mobile computing with 4G ushering in millions of mobile apps along with greater device functionality. 5G advances us to at least 1 gigabit per second download speeds with 10 times what we are experiencing today at a minimum and potentially up to 100 times faster.
Currently there are about 25 U.S. cities with 5G deployed. It will likely be another 24 to 36 months before spectrum and devices are fully functional throughout most of the country. And the progression will become a game changing advancement for many industries – remote healthcare capabilities, autonomous trucking fleets, advanced manufacturing automation, retailing and entertainment with high definition AR and VR along with never-before-experienced download and streaming speeds.
Digital payments will be included in rapidly expanding business models including machine-to-machine, device-to-device financial transactions creating a need to KYM, Know Your Machine, along with traditional Know Your Customer (KYC) requirements existing today. Layer-in billions of IoT devices and endpoints with billions more to follow with device connectivity at lower cost and higher reliability. This will accelerate payment evolution by pairing greater automation, cloud infrastructure and AI functionality into payment transaction flow especially in industries such as travel and hospitality supported by geolocation, multi-point and multi-layer authentication without latency in transaction validation, fraud detection and data analysis.
With all this data flowing, privacy becomes a key discussion point. And here comes CCPA along with other iterations which will follow from more than 20 U.S. States. Targeted advertising, the payment industry, and all who use it, may get much more complicated and challenging. CCPA – California Consumer Protection Act – was signed into law in June 2018 and became effective January 1, 2020 with an objective of assigning accountability around the collection and use of personal data. There are, however, significant open questions related to compliance and governance as well as associated management costs which will need to be core among considerations for deployed endpoints/devices collecting or having the potential to collect consumer information including where and how it will be used. Given the relative ease of movement of digital data and most major companies transacting business in the State of California, CCPA enforcement and impact will reach well beyond the California borders. There is a six-month grace period, a presidential election following soon after and consumers as the drivers of enforcement so 2021 is more likely to see related compliance activity.
The payment industry has authentication, transaction flow and encryption broadly incorporated with audits and control requirements well defined. The FinTech sector will need to help lead the movement related to financial transactions among 5G endpoints given the speed at which payments evolve and expand with advances in technology. This will require close interaction and coordination with and among telecom, cloud and “technology-as-a-service” providers throughout the country. 2020 is here, 5G is on the way and 6G will not be too far behind.