Tech Payments Compliance: It Pays to Lean In

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Tech Payments Compliance: It Pays To Lean In

Although the infamous “move fast and break things” motto was coined at the beginning of the technology boom, it remains a core tenet, even as the industry faces new challenges that have slowed its breakneck pace.

Vincent Tarantino

Senior Principal

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Maria DeRoss

Senior Account Leader

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The technology industry is lean, agile, and iterative, emphasizing rapid growth and change that can introduce a wide variety of risks, especially since regulatory changes and security threats are moving just as fast.

The moment you begin accepting payments online, your risk exposure multiplies, both for your business and your customers. Compliance efforts become even more critical, including the prevention of fraud and money laundering, responding to international sanctions, and ensuring customer data privacy and identity protection.

In an industry where risk is inherent, the way you manage it can make all the difference. Technology companies can make a significant difference by adapting and incorporating payments compliance into relevant core business practices rather than viewing it as a necessary evil. Prioritizing robust security infrastructure and risk mitigation will safeguard your products and services while allowing you to focus on innovation and product development.

The stakes are high

A poor compliance infrastructure can expose your customers and your company to financial and reputational risk. Examples are bad press, additional scrutiny, and even financial ruin.

The cost of failing to prioritize compliance is enormous, with plenty of real-world examples that make this point clear. Repeated infractions under the European Union’s antitrust laws have added up to fines upwards of $8 billion for one tech giant – far more than most companies are able to easily pay. Another major online retailer is facing similar fines in the hundreds of millions.

Early collaboration is key

Compliance experts are trained to spot issues and violations that others miss – even at the foundational level. The earlier compliance partners are included in your strategy and planning, the better equipped they will be to keep your efforts on the right track throughout your development lifecycle.

When compliance is consulted just prior to launch, teams often find themselves needing to rework key project elements to satisfy rules, regulations, and internal policies – putting compliance in the unfair position of blocking progress. Ensuring you’ve considered compliance requirements from the get-go will save you the trouble. Compliance teams prefer to be seen as strategic partners rather than roadblocks. The difference comes down to when and how often they are included as collaborators throughout your project.

Benefits of leaning into payments compliance

Setting up a robust compliance structure can help you:

MITIGATE EXPOSURE TO RISK. Stay abreast of fast-evolving risks while heading off hefty fines and threats such as cyberattacks, fraud, and money laundering.
MEET REGULATORY SCRUTINY. Ensure your company and products align with complex, rapidly evolving laws and regulations that vary from country to country.
GAIN COST-EFFICIENCY. Taking a proactive, cross-functional approach can help you do more with less across your operation by eliminating ad-hoc efforts.
LAUNCH PRODUCTS SEAMLESSLY. When compliance is included throughout the project, you can launch quickly and effectively without exposing the company, and your customers, to new risks.
INCREASE AGILITY. The right compliance infrastructure enhances your ability to pivot and recalibrate quickly in a competitive, fast-evolving industry.
ENHANCE VISIBILITY. In addition to monitoring regulatory changes, compliance teams often work directly with local officials and governing bodies to represent your company’s interests and keep you ahead of the narrative.

The bottom line: Compliance is a complex, evolving, mandatory function that requires consistent and ongoing investment. It’s essential to rethink age-old approaches by moving from transactional to cross-functional thinking, eliminating silos, and increasing internal awareness of complications and risks.

6 steps to get ahead of the compliance curve

Here are 6 essential steps technology companies can take to get and stay ahead:

WATCH AND LEARN. Take note of how other industries are addressing compliance. While the technology industry is unique, it is shortsighted not to learn from the compliance best practices, missteps, and failures of banks and large financial institutions, which have been heavily regulated for decades.

GET STARTED EARLY. Many have the misconception that addressing compliance issues can create delays, but in reality, timely compliance integration can accelerate your organization. Engaging compliance early will improve your time to market. With the right expertise at the table, you’ll be able to spot and sidestep easily avoided issues and reduce or eliminate delays.

ESTABLISH A PRODUCT REVIEW COMMITTEE. Assemble a team with representatives from all relevant parties — product teams, operations, compliance, legal, etc. — and ensure they weigh in at each project phase. The right governance structure will help ensure any risks are addressed in a timely manner.

CHOOSE YOUR TECHNOLOGY WISELY. Increasing your headcount may not be necessary with investment in the right processes and tools. A thoughtfully chosen technology stack and a commitment to solid data governance can significantly streamline compliance operations. For example, we helped a client implement a machine-learning model to improve compliance efficiency. The result was a 37% reduction in false positive alerts. This reduction allowed the compliance analysts to focus on expansion into new markets.

EMPLOY SMART DATA GOVERNANCE. Data compounds by the nanosecond. Gone are the days when you could review data as it occurred. The sheer volume of data collection requirements means you need tight control over your data and how it moves. Build checks and controls to protect customers’ data and remain compliant while analyzing and using it to enable strategic decisions.

This is especially crucial in payments compliance. Robust data protocols are the common denominator across all aspects of the compliance space. Laws and regulations around personal data vary from country to country, and a strong compliance function should build processes that adhere to each regulatory environment you do business.

We work with technology companies of all sizes — from industry leaders to budding startups — to stand up, build out, and optimize effective payments compliance operations. Some companies permanently integrate us into their team, while others need clear, expert training and a set of best practices for reference. Whatever your goals look like, we’re here to help you optimize compliance in the tech world.

COLLABORATE. Eliminate silos wherever possible. Promote cross-functional collaboration by establishing regular touchpoints and explicit, formalized solicitation of honest feedback and transparency. Facilitate regular, clear communication within your compliance team and ensure their goals and objectives are incorporated during project planning.

We helped a tech client implement a new risk rating model to remediate audit findings. The new model resulted in a 96% reduction in backlogged enhanced due diligence cases. This enabled the client to meet regularity requirements in just 8 weeks — compared to the original projection of 8 months.