B2B Payments

The Uncharted Territory Of Blockchain Compliance

SMBs working across borders may embrace blockchain payments, but that means entering the largely uncharted territory of compliance. Here’s why, according to Align Commerce’s Jay Hansen.

In the cross-border world, delays in information, language barriers and the vagaries of exchange rates mean lost time and money. Wire and exchange fees can eat into profits. And invoices can be left languishing.

Enter Align Commerce, which earlier this year started beta testing bitcoin and blockchain solutions to be used in cross-border wire transactions. Speed is of the essence, and in the new age of FinTech and global commerce, transparency is key.

PYMNTS caught up with Jay Hansen, who joined Align Commerce this month as compliance officer and general counsel, to get a sense of how compliance and regulatory issues cross boundaries and industries and can find a salve in bitcoin and blockchain.

In the move toward SMBs embracing payments technology that spans regulatory and compliance issues, said Hansen, often he found, and still finds, that “people fall in love with the technology, and perhaps are not as informed about compliance” and the more immediate needs of what has to be done to ensure that cross-border transactions are done as efficiently as possible.

In fact, some of the more basic tenets of international transactions need to be satisfied before best results in transparency and B2B relationships can be fostered, regardless of whether the tech being employed spans bitcoin or more traditional avenues. Hansen noted that SMBs face challenges that include the need to “truly know your customer … and among the questions that must be asked are: ‘How do we collect and verify information about this customer, and how do we know they are who they say they are?’”

One way to circumvent the guesswork through trial and error related to those questions and the pitfalls of being at the mercy of less-than-honest people on the other side of the transaction: cross-border payment technology that is tied to blockchain technology.

Align said last month that it had raised $12.5 million to use blockchain and bitcoin to get money between SMBs, which circumvents the need for currency conversion (and transactions can be done using only email addresses between parties). Bitcoin acts as a conduit of sorts between two disparate currencies and locations. This helps avoid what Hansen termed the “unforeseen delays” that can trip up transactions between parties. “By the time the dollars get there, after issues and fees, the amount that winds up there may not be the amount that is expected.”

The platform itself, said Hansen, allows for tracking ability across transactions, which, of course, allows for visibility across parties in real time. With a straightforward payment structure, where money laundering chicanery is virtually impossible to conduct, terrorist funding and other international concerns are mitigated.

Hansen told PYMNTS that blockchain has seen an embrace by SMBs, and in reference to gathering steam as a payment rail of choice in B2B, said Hansen, “most of our customers don’t particularly focus on the method of delivery but rather on the blockchain’s benefits. Similarly, when you have an email in your inbox, do you question the protocol and the email clients that are used to send and deliver your email? Probably not. All the sender and the receiver care about is that the email was sent and delivered in a timely manner.”

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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