Tag: Risk/Compliance | Page 2

Digital Wallets: A Deep Dive into the New CFPB Rule

Buried within the 1,689-page Consumer Financial Protection Bureau (CFPB) “final rule,” or Prepaid Access Rule, are provisos that pertain to digital wallets. In a previous article, I shared the basic outlines of the rule itself and how it relates to digital payments. But how worried should payment facilitators who operate a digital wallet be?

Take A Deep Breath PFs, Beneficial Ownership Rule Is Not So Bad

First things first: In our opinion, the Treasury’s May 11 FinCEN rules are going to impact ISOs and Payment Facilitators alike, in that banks are going to make them follow these new rules.

Although the rule does not speak to ISOs or PFs underwriting merchants or submerchants, we fully believe if you are required to do KYC now — and ISOs and PFs are required to do KYC now — they will be required to do the increased KYC under the new rules.

Visa’s New SMB Rules Add PF Complexities

When Visa recently added more rules on its smallest merchants—PCI Level 4s—it created a sales opportunity for payment facilitators by giving SMBs an even stronger reason to outsource its payments activities. At the same time, it added more complexity to PCI management for those PFs.

Mike Cottrell, head of global sales and marketing at ProPay, tried to put the new rules into perspective for payment facilitators in this week’s PaymentFacilitator.com podcast.

Questions Every New Payment Facilitator Should Ask Its Payments Attorney

Under the latest card brand rules, payment facilitators are being held to exacting requirements. Note that the acquirer is now able to terminate a PF contract immediately with “good cause.” So while state and federal regulation may get the bulk of the attention, those are hardly the only areas of potential rules-enforced disasters.

Visa’s Core Rules, for example, have the PF being “liable for all acts, omissions, cardholder disputes, and other cardholder customer service related issues caused by the Payment Facilitator’s Sponsored Merchants” and “is responsible and financially liable for each transaction processed on behalf of the sponsored merchant, or for any disputed transaction or credit.” MasterCard similarly requires that “the payment facilitator must ensure that each of its submerchants complies with the standards applicable to merchants.” Understanding the limitations and obligations that the card brands impose upon PFs is crucial to ensure the ongoing operations of business.