Payment compliance professionals are taking back control
Sponsored by VIXIO
Roseanne Spagnuolo, Chief Product officer, VIXIO
The payments industry over the past 20 years has been turned upside down by new technology firms disrupting and extending the reach of digital payments, with a focus on frictionless user experiences. As one of the most highly regulated industries in the world, a balance needs to be struck between safeguarding customers and the growth ambitions of these new firms. For many, not knowing what regulation is coming means a huge burden is placed on global payment providers. VIXIO changes regulatory compliance from a burden to a competitive advantage.
The challenge for payment providers
Governments encourage competition and innovation in the payments space as they see this as an important area of growth and for servicing business and consumers better. Regulators are there to protect us and have hardened rules that govern how those protections are implemented. Given the current economic environment, consumer protection and managing risk are top of mind for regulators who are targeting firms that prioritise growth over these protections. Balancing growth with compliance becomes particularly challenging when:
• A firm works in multiple jurisdictions
This means staying on top of changes in regulation across multiple jurisdictions in order to avoid reputational risk and significant fines becomes untenable.
• Finding the needle in the haystack
In 2022 we tracked over 300,000 regulatory changes globally, of which only 978 were relevant to payment firms. Of those, only 200, or 0.32 per cent, required action. This means self-reliant compliance teams are overwhelmed as they sweep across jurisdictions trying to decipher relevant regulation in order to identify the ones that need immediate action.
Keeping compliance teams cool under pressure
VIXIO helps companies continue to grow and stay compliant at the same time. Our business model uses both technology and analyst insights to help compliance teams understand what is coming and to deep-dive into the complex regulation. More simply, we provide an in-depth overview of the past, present and future state of regulation:
1. Past. We provide reports that cover what is important to understand in a given jurisdiction – for example, what licence is needed, what business activity that licence allows the company to offer, and the requirements to eventually operate in that jurisdiction. Finding this information is laborious, particularly if you are looking into markets where the regulators are not so forthcoming or transparent.
2. Present. Deep market insights and analysis give compliance executives the lay of the land, which give foresight into where policy decisions are going to better understand market trends and developments. Our analysts spend time with experts, government representatives, and regulators, to get at the heart of key issues and report on potential outcomes or changes in the industry.
3. Future. The ability to gain a global view of regulatory change across more than 140 jurisdictions. Horizon scanning, a powerful real-time monitoring tool, ensures that firms are not missing critical updates. The tool systematically manages regulatory change. For regulators, this brings additional transparency and comfort as they know there is a system in place which provides a logged audit trail.
Additionally, compliance executives can quickly assess whether the change is informative, indicative or actionable – finding that needle in the haystack becomes easy – which helps them understand where to allocate resources and update global risk and control policies.
Regulation is constantly evolving and developing as policymakers respond to changing economic and market factors. 2023 is already shaping up to be a bumper year for payments regulation, particularly in Europe.
This summer, the European Commission plans to release its proposed revisions to the Payment Services Directive, a possible Payment Services Regulation, Open Finance framework, Late Payments Directive, as well as new digital euro legislation.
This is on top of Markets In Crypto Assets regulations, which went through their final parliamentary hurdle in May; the ongoing negotiations for new instant payments legislation, expected to be agreed in the next 12 months; implementation of the Digital Operational Resilience Act (DORA), a regulatory framework to ensure the resilience of digital firms; and plans for an EU-wide electronic identification (eID). This could lead to a regulatory bottleneck.
In the UK, one of the big pieces of new regulation that will impact payment firms is in consumer duty. Due to come into force on 31 July, it will require firms to act in a way that delivers good outcomes for retail customers. This means considering the needs, characteristics and objectives of consumers at every stage of the customer journey and taking into consideration the vulnerability of their customer.
Importantly, it will not just be applicable to firms who deal directly with consumers, but also B2B firms if their actions have a material impact on the end consumer.
At the end of the day, VIXIO acts as an early warning signal that provides compliance teams with a safety net. Our job is to reduce the unnecessary regulatory burden to help compliance teams spend more of their time as an enabler, rather than a blocker, to business growth.
Business Reporter Team
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