Payments Compliance: Should Your Business Worry About It?

The growth of digital payments has necessitated laws and regulations to safeguard payments from fraud and hacks. Unwary customers often find themselves the victims of fraud, which in turn creates a vicious cycle that can be damaging to a business, its customers, and its market reputation. That is why payment regulations exist. These laws and standards govern the entire payment processing system, and adhering to these are a must for you to conduct business successfully. In this article, we will discuss about payments compliance, your role as a business owner, and why it is necessary.

So, what is payment compliance?

Payment compliance means adhering to all laws, regulations, and industry standards related to payments processing. Payment processing is the entire system that is involved in processing digital payments between consumers and businesses. It includes verifying and approving payments as well as capturing, storing, and securely transmitting sensitive payments data.
Payment compliance is important for several reasons:

1. First of all, it ensures your payments are secure and protects businesses and consumers from fraud.
2. Second, it maintains transparency and accountability in the financial system and prevents money laundering, terror financing, and other illegal activities.
3. Third, it helps build consumers’ confidence in your brand, improves your reputation, and lessens the risk of fines, penalties, and business disruption.

Some examples of payments laws in Europe include the PCI DSS, the Second Payment Services Directive (PSD2) and the General Data Protection Regulation (GDPR). Each of these have specific requirements that businesses must comply with.

Read more: 4 Payment Regulations Every Business in Europe Should Know

Why is Payments Compliance Necessary?

Digital payments have evolved in leaps and bounds. While on one hand, consumers have more choice and flexibility in how they shop and pay, they also face newer threats. Hence, payment regulation and compliance. Sensitive payments data needs to be kept safe from unlawful access and misuse. Payment regulations exist to reduce risk and keep businesses and consumers in Europe safe. As digital payments and consumer behaviour has evolved over time, so has regulation. Newer laws have come in over the last decade. With growing fintech innovation, regulation has had to adapt and become more inclusive over time. Plus, consumer protection laws are stricter in Europe, compared to the US or China. Current laws in Europe require merchants to achieve 100% payments compliance. Failing to do so can attract costly penalties and fines, not to mention getting barred from doing business.

Read more: Electronic Payment Rules in Europe: 6 Points Merchants Should Know

How Can Businesses Achieve Payments Compliance?

Navigating payment regulations compliance can be complex for a business, especially if you operate in multiple markets. After all, which ones should you concern with. Fortunately, modern payments technology has evolved to help you keep up with payments regulation and ensure business runs smoothly. For example, AI and Machine Learning tools help you to monitor payments data in real-time. This helps you flag and report any suspicious activity and prevent fraud. Higher transparency (of your customer data and transactions) helps you stay compliant with the Anti-Money Laundering Directive (AMLD) in Europe, which aims to combat money laundering and terror financing in the EU.

Using Know-Your-Customer (KYC) and Know-Your-Business (KYB) tools help you improve user verification and reduce anonymity, which is required under the AMLD. Another example is using 3D Secure 2, which helps you perform stronger customer authentication (SCA), which is required as per the PSD2 law in Europe. Or, using a PCI DSS certified payment gateway to keep data secure. Working with a reputed and trusted payments partner like Novalnet can help you figure out which strategy and approach works best for your business. Based on your needs, you can use the right tools to comply with payments laws and ensure 100% compliance.

Read more: How Payments Tech Helps with Compliance

How can Novalnet Help?

We can help you achieve 100% payments compliance. Our tools and technology are aligned with all global and local standards to ensure your payments are safe. As a global PSP, we are trusted advisors to Europe’s leading brands. Our state-of-the-art technologies and methods help businesses accept payments globally. From our instant payment plug-ins to our AI-based risk management tools, we have the resources to get you up and running with your payments in a short time, and with zero hassle. We are also compliant with all leading industry standards, such as PCI DSS and BaFin.
Reach out to us today to know more about how we can help you.

Jose Augustine

Jose Augustine is the Chief Business Development Officer at Novalnet with extensive experience in European payment industry and a knowledge powerhouse.