Category: Underwriting

Supplement KYC Efforts Using Corporate Registration Research

As Know Your Customer (KYC) regulations become increasingly critical in the underwriting process, payment facilitators may seek to better understand high-risk merchants by collecting information separate from what is provided by the applicants themselves. Corporate registration records offer reliable, useful data that may help to paint a more complete picture than application information alone. Knowing where to look and what to look for may lead to more effective Customer Due Diligence (CDD) or Enhanced Due Diligence (EDD) efforts.

Compliance in 2018: “Consumer Harm” Still Front and Center

Last year was a regulatory year to watch in the U.S., as a new – more anti-regulation – administration took the helm.

And it certainly did deliver some drama as CFPB Director Cordray departed, kicking off a fight for control of that agency.

We asked Deana Rich, CEO of Rich Consulting, to go beyond the spectacle and talk about any impact the new administration has had on regulatory issues and what payment facilitators should watch for in 2018.

Customer Due Diligence Requirements are Changing for Financial Institutions. What Does This Mean for PayFacs?

Financial transparency and security are important. FinCEN and the staffs of the Federal functional regulators and the Department of Justice agree. As such, FinCEN has determined that more explicit rules for covered financial institutions with respect to Customer Due Diligence (CDD) are necessary to clarify and strengthen CDD within the Bank Secrecy Act (BSA) regime.

WePay on Chase Acquisition: “The Same, Only Better”

As WePay Chief Strategy Officer Rich Aberman sees it, there are two primary types of acquisition plays in the payments industry.

First, there’s the kind where one payments company buys another payments company and rolls it into an existing business, for the boost in revenue or transaction volume.

Then, there’s what Chase is doing with its plans to buy WePay.

Q&A: The Risks and Benefits of Frictionless Underwriting

The advent of frictionless underwriting turned the payments world on its head. The ability to onboard merchants quickly with a minimum of fuss has enabled small merchants to accept payments more easily, clearing the way for many more to enter the market.

But the practice does have its downside. Lowering barriers to entry into the payments system lowers them for everyone, not just the good guys. With that in mind, is beginning a series on the perils and the benefits of frictionless underwriting.

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.

New CFPB Lawsuit Reminds PFs: Use Frictionless Underwriting for High-Risk Merchants at Your Peril

Last week (Sept.23), the Consumer Financial Protection Bureau filed a lawsuit against a credit repair company called Prime Marketing Holdings.

In a press release announcing the complaint, CFPB Director Richard Cordray said, “We are taking action against Prime Marketing Holdings for luring consumers with misleading claims about its ability to repair credit files and then charging illegal fees.”
This case is a reminder to PFs that, when you’re dealing with merchants in high-risk categories, frictionless onboarding is not the way to go.


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