It’s hard to avoid talking about mobile payments in the wake of Apple Pay, but if you’re a community bank weighing the pros and cons of rolling out a mobile wallet of your own, some say the danger may be in waiting too long to do so.

“It seems like a number of the community banks aren’t even pursuing it,” said Matt Putvinski, director of IT assurance and security at the Boston-based Wolf & Co. “They’re traditionally not early adopters of newer technologies and this seems to be a classic case where many of them are sitting back and waiting for this whole payment system to work itself out to see where they really want to spend their efforts.”

Between the cost of adoption and regulatory scrutiny of vendor management – not to mention, achieving a critical mass among consumers that would make a mobile wallet app worth it in the first place – it’s not too difficult to understand why community bankers might be cautious about the latest app.

But even the most cautious community bankers may want to take a second look at some type of mobile payments solution for one major reason: security.

“Generally speaking, anything that can take the magnetic stripe out of the transaction is increasing security. When you look at the large breaches, you look at the Home Depots, the Targets of the world, the problem today is the security of the magnetic stripe,” said Mike Urban, Fiserv’s director of financial crime risk management.

While there are a variety of mobile wallets on the market today, the mobile wallet is essentially considered a safer way to pay because it encrypts the customer’s payment information before sending it to the merchant, instead of sending that information wholesale to the retailer’s database via magnetic stripe.

If a cyber-thief manages to breach the retailer’s system, Putvinski said, “they need to not only get the code but then figure out a way to get further into the payment system to actually get any value from that code, as opposed to now where all they need is the information that’s getting passed from the credit and the other data on the magnetic strip.”

Clearing Barriers To Entry

According to Lynne Barr, partner at Goodwin Procter and chair of the firm’s banking and consumer financial protection practices, mobile payment applications have never been more accessible to community bankers.

“I advise a lot of banks with respect to their third-party data processing contract, and this is now an application that’s offered when they’re looking at renewing or changing their core processor,” she said.

But Barr also identified three major barriers to entry for community banks.

First, bankers have to contend with intensified regulatory scrutiny of vendor management, particularly where third-party technology providers are concerned.

Second, bankers must be conscientious of compliance with consumer protection rules that may apply to electronic payments and transfers. Regulation E, for example, comes into play here.

Third, data security is another major concern for community bankers taking a hard look at mobile payment apps.

“What’s obviously not known yet is how well Apple and these other wallets are actually protecting [customer information] internally. It’s still new, so they haven’t necessarily seen any breaches of that, but it does appear that it’s a much stronger, more secure solution than the traditional point-of-sale,” Putvinski said.

In spite of those hurdles, at least a few Massachusetts banks are implementing their own mobile payments solutions. Eastern Bank, for instance, is planning to implement Apple Pay sometime next  year, said Chief Digital Officer Dan O’Malley.

Cost, of course, is a factor, he said.

“There’s setup cost to get going with Apple Pay and then there’s an ongoing transaction cost, so it’s nothing but additional cost from our side,” O’Malley said.

He added that online banking software is another additional cost, but the point is that it keeps customers happy and keeps them coming back.

Meanwhile, Avidia Bank, in Hudson, expects to launch PayNet in the first or second quarter of 2015, Chief Operating Officer Robert Conery said.

Conery expects that PayNet will be an attractive payments solution for merchants, as well as customers, because unlike many other mobile wallets, it can tokenize the customer’s account information, not just the credit or debit card information, and debit a payment directly from the customer’s checking account, in the process bypassing interchange fees that have retailers gnashing their teeth.

And last summer, Boston-based Radius Bank – then known as First Trade Union Bank – launched its own mobile payment app in conjunction with LevelUp.

“The adoption of technology in banking is only going in one direction,” O’Malley said. “You can either choose to adapt or you can choose to not, and banks that don’t become irrelevant.”