Category: Compliance

Will the Real Merchant (of Record) Please Stand Up?

In this article we discuss what it means to be the merchant, the differences between MOR status and providing MOR services to merchants, and the potential consequences of improper use of the MOR concept to describe payment facilitation services.

Payment Facilitators and PCI: “Everybody Has to Start Somewhere”

An organization’s PCI scope – the components of its business that need to be included in an assessment – can have a dramatic impact on the costs for that company to comply with the security standard’s requirements. According to Chris Bucolo, that’s the fundamental reason payment facilitators need to “engage early.”

Money Transmission in the Payment Facilitator Model

The payment facilitator model continues to grow in popularity in the merchant acquiring space as a way to board merchants quickly and with minimal friction. While there are many benefits to this model, payment facilitators and their sponsoring banks and processors should be aware of the potential money transmission risks.

Part II: You, Me, and Everyone You Know – The Impact of FinCEN’s Beneficial Ownership Requirements

In part I of this series, we discussed the impact of the beneficial ownership rule on banks and their payment facilitator relationships. In this installment we discuss how the beneficial ownership rules apply to a bank acting as an originating depository financial institution for Automated Clearing House (ACH) transactions and its relationships with Originators, Third-Party Service Providers, and Third-Party Senders.

You, Me, and Everyone You Know – The Impact of FinCEN’s Beneficial Ownership Requirements

If you’re a payment facilitator, how much do you currently know about the owners of your sub-merchant customers? If you’re a processor, how much do you know about the owners of your payment facilitator customer’s sub-merchant customers? And if you’re a bank, how much do you know about the owners of your processor customer’s payment facilitator customer’s sub-merchant customers (who are, technically, also your customers)?

A Payment Facilitator’s Guide to Staying Out of Regulatory Crosshairs

The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) have increasingly targeted actors in the payments industry—including processors and independent sales organizations (ISOs)—for allowing “bad” merchants into, or to remain in, the payments ecosystem.

Indeed, when regulators identify significant consumer injury resulting from a merchant’s deceptive practices, it is not uncommon for the merchant’s payment processor and/or ISO to be named as a codefendant in an ensuing enforcement action—along with individuals at the processor or ISO who facilitated the merchant’s processing activity.