How Does Compliance Fit Into the Global Payments Landscape?

Ahead of a panel discussion at Tipalti Illuminate 2022, Zenwork’s Chief Strategy Officer, Jeff Cronin, delves into how compliance plays a significant role in leveraging and processing global payments.

 

The global payments landscape has evolved significantly over the last decade. What we once thought of as a term to describe the exchange of currencies between banking institutions and different countries, now encompasses third-party payment providers and neobanks. These payment types were born from the need to conduct cashless and swift transactions to navigate businesses and consumers through our current economic and financial climate.

 

On September 14th,, I’m participating in a panel for Tipalti’s Illuminate Conference where we’ll delve into the topic “Emerging Trends in the Global Payments Landscape,” led by Adam Parness of Adam Parness Music Consulting and Former Global Head of Music Publishing at Spotify.

 

We’ll highlight the driving forces behind the global payments landscape in the context of the creator economy, discuss how to leverage digital payments as competitive advantages, and provide insights into developing a winning strategy to create seamless end-to-end, digital-first payment experiences. These topics are absolutely integral to understanding where we are and where the market is headed and how that affects everyone around the world. In addition, we need to consider how compliance aligns with the trends in the global payments landscape.

Key Industries Impact Global Economy Forever

According to recent data from The World Bank, more consumers and businesses are now using digital payments than ever before. Last year, over one-third of adults in most low and middle-income countries made their first digital payment and paid a bill online. In India, more than 80 million adults made their first digital merchant payment within the last couple of years. And in China, over 100 million adults did. Today, two-thirds of adults worldwide make or receive digital payments for services.

 

Many real-life events drove the mainstreaming and proliferation of digital payment methods. The COVID-19 pandemic, economic and political uncertainty, and the boom of the gig economy have all accelerated the push towards the current reality: digital payments are now faster than ever and just as secure, if not more when compared to the dated brick-and-mortar operations that use the physical currency.

Digital Payments Serve As Competitive Advantages

If you are one of the few who is slow to adapt to the changes in digital payments, I have news for you: it’s time to catch up or be left behind. There’s no going back to the way we conducted business in the past, even on a digital or cashless scale. With so many ways to send and receive payments, fast digital transactions at each stage (from user onboarding to payment disbursements) provide a variety of competitive advantages that companies leverage.

 

The convenience with consumers/merchants/neobanks, easy digital payments and data management, and how it connects businesses and people from all points of the world, only being a few of them.

 

Further, global payment operations never have downtime; transactions occur around the clock at just the click of a button. Only companies that are diligent with their compliance processes and track them ahead of other regulatory agencies tend to succeed.

Tracking Global Payments: Who is Tracking Payments, What Payments Are Being Tracked, and Why is it Relevant?

The boom of digital payments inevitably means that it draws the interest of those outside the transaction ecosystem. It presents certain challenges on a domestic and global scale that some would argue require oversight.

When we think of tracking global payments, we need to ask ourselves three questions.

Who Is Tracking?

On a domestic standpoint, a government agency is typically tasked with payment tracking as new laws are introduced. . New payment methods are monitored and the data is gathered to determine how much income is earned through digital transactions.

 

From a global perspective, it is important to track payments to avoid money laundering, fraud, and association with sanctioned persons and countries. Over a dozen watch lists are active and constantly updated, so consumers and businesses who use those platforms can be verified and onboarded securely.

What Payments Are Being Tracked?

As we discussed previously, any digital transaction, no matter how discreet or secure, is subject to track. Crypto payments/NFTs (i.e. Bitcoin, Doge, Etherium), Third Party Payments (i.e. Venmo, CashApp, Square, Paypal), Cashless Payments from Vendors, and other digital payment transactions are tracked.

Why Track These Payments?

Every payment made, should come from only verified sources to avoid impropriety or the risk of money laundering.

 

Let me use an example: If a video goes viral on a social media platform that requires compensating the creator either through donations made by others on the platform or the company’s generated ad revenue, the release of those funds should be dependent upon whether the vendor is real and verified. This means validating your users beyond their addresses and verifying whether they are members of sanctioned groups, citizens of sanctioned nations, or on a list of sanctioned individuals is critical.

 

Domestic and global consequences for violating compliance regulations could range from hefty financial penalties to federal/global sanctions, or even time behind bars.

 

When we mention how important the global payments landscape is to the daily functions of and the future of finance, we must provide equal consideration to the verification of the users we onboard, the source of their payments, and their associations with sanctioned individuals and organizations on global watch lists.

 

In short: compliance with the domestic and global financial regulatory ecosystem cannot be overruled.

How Compliance is Important in the Digital Landscape

Compliance is thought of in the media by one of the two extremes: an incredibly boring topic that typically draws yawns and side-eyes, or a provocative one, worthy of breaking news banners and endless panic-driven topics surrounding it. While it is nowhere near as uninteresting as many would lead you to believe, it is also not worthy of sleepless nights. Similar to antivirus software or surveillance services, compliance should be part of our everyday lives while functioning in the background, completely automated, so we have more time to devote to other key operations in our organizations.

 

Everyone speaks of compliance as a broad issue. When we speak of its implementation in global payments, it is not a one-size-fits-all solution to KYC/KYB. Compliance isn’t exclusive to catchy acronyms that encourage you to simply “know your customer” or “know your business;” it describes the backbone of the payment landscape and serves as the essential code-of-ethics for digital processors, gig economy platforms, and vendors.

 

To expand on how businesses leverage these solutions, it’s important to note some features are more integral than others to businesses. Many utilize the features from accounting software companies like Tipalti to verify vendors for faster onboarding, including the W8/W9 collection feature they offer. In tandem with that feature, many Tipalti customers now use the integration for Tax1099 to import user data, perform additional checks (including our Bulk TIN matching feature that returns results in a matter of seconds), and file 1099 NEC and MISC forms from data available on the site. APIs like the ones developed by Tax1099 and other SaaS companies like Zenwork’s Compliancely go even further with these global checks, which currently support over 30 countries in addition to the United States.

Making Compliance Work For You

There is no doubt that the way we conduct transactions today has transformed not only the global payments landscape but also consumer behaviour and our business practices. Many believe this to be the new way of doing business. I believe we are long past the shock-and-awe phase of digital payments. We already know that digital payments connect millions of people around the globe faster than they did twenty years ago, a decade ago, and even five years ago. As time passes, our approach to payments will also evolve. Transactions are faster than ever with more reach beyond your local brick-and-mortar. But the one thing that has always remained a constant and should continue to be is verifying all vendors to make sure they are cleared to do business in accordance with domestic and international laws.

 

In the past, we called different numbers on landline phones to verify persons or the status of funds in an account. Today, we have sophisticated software harnessing the power of payment providers and official verification checks that return results in a matter of seconds.

 

Not all bad actors use code to devise illegal and unethical financial schemes. As you leverage the advantages of global payments to onboard companies and consumers resistant to change, also leverage the safety and accuracy of that information beyond sophisticated hackers and two-factor authentication.

For More Information

If you want to know more about trends in compliance and how they relate to our operations, I’ll be one of two featured speakers from Zenwork at the Tipalti Illuminate 2022 events from September 13-15th 2022. We are proud to be a Gold Sponsor, participating in both virtual and in-person events throughout the conference.

 

On September 14th at 10:30 AM PDT, join me for a virtual panel discussion at Tipalti Illuminate 2022 where I will be alongside fellow panellists Cynthia Davis, Product Manager at Captiv8, and James Creech, Senior Vice President of Influencer Strategy at Brandwatch. We will be moderated by Adam Parness of Adam Parness Music Consulting and the Former Global Head of Music Publishing at Spotify. This is an important topic that we’ll approach from multiple sides and I look forward to the discussion.

 

Later in the day at 1:45 PM PDT, join our VP of Development, April Rae Mallord, for Zenwork’s sponsored digital breakout session titled “Contractor, Vendor, & Digital Account Opening Compliance from Onboarding to Tax Filing,” where she will provide valuable information on staying compliant when working with independent contractors and vendors. She will cover all things vendor compliance, right from onboarding and verification to informational tax form filing to the IRS and states. April will also provide a brief demo of Tax1099, Zenwork’s robust IRS-authorized e-filing platform that helps different types of businesses streamline and automate onboarding and filing processes. Also, with more and more financial and gig services moving to the digital realm, you can learn how to mitigate risk with real-time identity verification platforms like Compliancely.

 

And our dedicated sales representatives will be in person at The Pearl in San Francisco on September 15th, ready to answer any questions related to Compliancely, Tax1099, and how Tax1099’s custom filing integration compliments Tipalti.

 

Accelerate your future, drive the momentum, and gain valuable strategies.

About Jeff Cronin

Chief Strategy Officer, Zenwork, Inc.

 

Jeff has been working to incorporate technology as a means to streamline financial regulatory compliance and payment processing for over 25 years. With experience covering over 30 countries and a deep understanding of the regulatory frameworks applicable to the segment, he brings a wealth of experience and insight to the conversation regarding current regulatory frameworks from the EU Common Reporting Framework (CRS) to the US handling of contractor payments.

About Zenwork

Backed by Spectrum Equity, Zenwork, Inc. is a fast-growing digital tax compliance and regulatory reporting technology company, with 10+ years of experience in powering businesses with electronic tax filings and compliance checks. The company currently serves over 150,000 customers nationwide, including 30,000 CPA firms and enterprise customers. Zenwork has multiple compliance products under its umbrella, including Tax1099, Compliancely, EZ2290, and others.

 

Learn more about Zenwork at www.zenwork.com.

About Tipalti

Tipalti comes from the Hebrew expression for “We handled it.” Tipalti is the only company handling both Global Partner Payments and Accounts Payable workflows for high-velocity companies across the entire financial operations cycle: onboarding and managing global suppliers, instituting procurement controls, streamlining invoice processing and approvals, executing payments around the world, and reconciling payables data across a multi-subsidiary finance organization. Tipalti enables high-growth companies to scale quickly by making payables strategic with operational, compliance, and financial controls.

 

Companies can efficiently and securely pay thousands of partners and suppliers in 196 countries within minutes. Thousands of companies, such as Amazon Twitch, GoDaddy, Roku, WordPress, and ZipRecruiter use Tipalti to reduce operational workload by 80% and accelerate the financial close by 25% while improving partner visibility and strengthening financial and spend controls. For more information, visit tipalti.com.