NCFAs innovation and funding ecosystem

Plastic Policemen: Credit-card firms are becoming reluctant regulators of the web

The Economist | Oct 10, 2021

Plastic policemen - Plastic Policemen:  Credit-card firms are becoming reluctant regulators of the webFrom sex to free speech, what goes online is increasingly up to financial companies

WHO SHOULD police the internet? For some time now the question has tied companies, regulators and campaigners in knots. Social networks spend billions moderating content posted on their platforms, but are still criticised either for not removing enough toxic material or for stifling free speech. They are not the only ones to grapple with the problem. Banks and credit-card companies too are finding themselves playing a bigger role in what is said and done in the public square—to their, and their customers’, discomfort.

See:  Bank of Canada to become new regulator of fintech companies doing payments processing

Now the boundary of censorship is being extended further, into the pornography business. From October 15th adult websites worldwide will have to verify the age and identity of anyone featured in a picture or video, as well as the ID of the person uploading it. They will need to operate a fast complaints process, and will have to review all content before publication. These requirements are being imposed not by regulators but by Mastercard, a credit-card giant.

Websites can always choose not to work with Mastercard. But given that the company handles about 30% of all card payments made outside China, to do so would be costly. Visa, which manages a further 60% of payments, is also taking a firmer line on adult sites. And the trend goes beyond porn. In the shadier corners of the web, and in industries where the law is unclear or out of date, financial firms are finding themselves acting as de facto regulators.

Payments have become a tool of domestic and international policy,” says Aaron Klein of the Brookings Institution

Since the turn of the century, “payments have become a tool of domestic and international policy,” says Aaron Klein of the Brookings Institution, a think-tank. After the 9/11 attacks of 2001 America introduced new anti-money-laundering rules and more targeted sanctions. This system—a “21st-century precision-guided munition”, as a former head of the CIA called it—obliges financial firms to block payments to the individuals on a list which today runs to 1,604 pages.

See:  Payments without banks goes mainstream with Twitter on Bitcoin Lightning Network

Handing enforcement duties to companies relieves the taxpayer of some of the cost. Compliance departments at firms, meanwhile, have ballooned. It is not unusual for big banks, such as HSBC or JPMorgan Chase, to employ 3,000-5,000 specialists focused on fighting financial crime, and more than 20,000 overall in risk and compliance. In 2017 Accenture, a consultancy, reckoned that tech firms employed around 100,000 content moderators.

Payment companies in particular face a philosophical dilemma.

“On one hand they try to be very open, accepting, willing to facilitate payments for whomever. They’re not taking any sort of political or moral stance,” says Lisa Ellis of MoffettNathanson, a research firm. “But on the other hand, they also feel like they have a very strong responsibility in making sure that they’re not aiding and abetting any sort of crime.”

Continue to the full article --> here


NCFA Jan 2018 resize - Plastic Policemen:  Credit-card firms are becoming reluctant regulators of the web The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - Plastic Policemen:  Credit-card firms are becoming reluctant regulators of the webFF Logo 400 v3 - Plastic Policemen:  Credit-card firms are becoming reluctant regulators of the webcommunity social impact - Plastic Policemen:  Credit-card firms are becoming reluctant regulators of the web

Support NCFA by Following us on Twitter!






NCFA Sign up for our newsletter - Plastic Policemen:  Credit-card firms are becoming reluctant regulators of the web



For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate




 

Leave a Reply

Your email address will not be published. Required fields are marked *