Compliance from the PF Point of View: PF Day Preview

When a technology company decides to take on payments, it often seems like a natural next step. Who wouldn’t want to extend their services by enabling clients to accept payments?

Then reality sinks in. Adding the technical capability to move money is one thing. Opening the door to the complex web of federal and state regulation and card brand rules is another.

Understanding the rules, and balancing them with a business model that’s often characterized by agility and streamlined processes, can be daunting.

“The first hurdle is understanding the rules exist,” Deana Rich, president of Rich Consulting and co-publisher of, said of the challenges technology companies face when they’re thinking about becoming PFs.

“The second hurdle is learning payments and banking. The regulations in this world are much, much different than in the ‘normal’ world. In payments and banking, we have to think about terrorists and drug dealers and ensure that we are in no way facilitating funds movement for them.”

While compliance is a concern for all players in the payments ecosystem, solutions are not one-size-fits-all. Because of their business models and in many cases their technological expertise, payment facilitators may approach the tasks differently, Rich said.

“PFs, particularly non-horizontal ones, tend to know their clients better than typical ISOs,” Rich said. “So, although the compliance rules are the same, the PFs often have more tools at their disposal to accomplish the same compliance tasks.”

For example, PFs might approach underwriting differently from other players in the ecosystem because of their existing relationship with clients, Rich said.

“A PF that sells a very vertical-specific software will often research the potential client extensively in the pre-sale process,” she said. “Thus, they know the customer is real or they would not have targeted them for the software sale.  Now all they have to do is KYC the owner. They have already completed the KYC on the business. This puts them ahead of others.”

Fortunately, the industry has a wealth of expertise about issues like these waiting to be tapped. And some of that expertise will take the stage during Payment Facilitator Day at TRANSACT.

Rich will moderate a panel discussion with industry compliance and government relations experts. Panelists include Jonathan Genovese of Vantiv and Holli Targan of law firm Jaffe Raitt Heuer & Weiss.

The panel will cover the current regulation climate and the issues that apply specifically to payment facilitators, including FinCEN’s beneficial ownership rule, state money transmitter rules and PCI requirements for submerchants.

Payment Facilitator Day is a day of specialized content presented by The event is available to invited guests only. If you are a payment facilitator or are considering the model, you can request an invitation on the event’s web site.