🏦 payment processing

In lieu of platform regulation, policymakers are leaning (too?) hard on payment processors

Mar 13, 2022

Owl! at the Library 😴🧙‍♀️ @SketchesbyBoze

stop shaming people for reading kids’ books. adult books are about sad people having affairs while kids’ books have a magic tree house or a worm driving an apple. you tell me who’s winning

danielle weisberg @danielleweisber

I love when married people are like marriage is the best!! it’s hard work!!! it is work it is hard and the work is hard!! it is the hardest work I have ever worked hard at!!!! like ok I already have a job so no thank you I’m good then

Brian Goldstein @bgoldst

Eames House hot take: everything we need to know about the housing market today is embodied in the idea that a young couple (late 30s/early 40s) of architects could once afford to buy an acre-plus in Pacific Palisades and build a house from scratch.

Just me, or is the power of online payment processors increasingly being invoked by policymakers as a stand-in for comprehensive platform regulation?

They seem to be relied upon by the state as intermediaries that can successfully moderate undesirable, questionable or illegal behaviours online.

Christopher Parsons @caparsons

Almost two weeks ago, I worried we’d see new surveillance powers resulting from the situation in Ottawa & elsewhere. We’re now likely to see new financial surveillance powers. And, if accounts of online radicalization are true, I’d expect legislation around that as well.

Christopher Parsons @caparsons

Watching the protests/occupations in Canada, and law enforcement failures, and I can practically hear the legislation being drafted to further empower the same agencies. The stuff that LEAs have sought for the past few years and not gotten? Likely soon all on the agenda, now.

While the most pronounced and tangible instances of this phenomenon are the recent SWIFT sanctions, there are also examples involving credit card companies and crowdfunding platforms that reveal payment [service] processes as de facto e-commerce regulators.

Noahpinion

The big sanctions: A quick explainer

The war in Ukraine rages on (For updates, check out my Twitter list). Although they’re still not thinking of getting involved militarily, the U.S. and European nations are openly delivering more weapons and other aid to the besieged Ukrainians. Germany, it’s worth noting…

3 years ago · 104 likes · 22 comments · Noah Smith

In lieu of complementary platform regulation that better articulates the government’s expectations of platform companies and payment processors, we’ve been leaning hard on the obligations of payment processors as proxy for better policy.

Here are some recent examples of this that I’m trying to make narrative sense of:

1. Pornhub’s 2020 content uploading change, which only allows “properly identified users to upload content.”

This felt like a peek at what the future of platform regulation could look like. It was widely reported that VISA and Mastercard “strong armed” the company into making the change, which stripped sex workers of their recently-found autonomy and revealed the power of shareholder interests to motivate a disciplinary intervention.

EFF @EFF

This isn’t a debate over whether Pornhub is predatory. This is a question about what level of censorship power we want to give to payment processors.

eff.orgVisa and Mastercard are Trying to Dictate What You Can Watch on PornhubPornhub is removing millions of user-uploaded videos. This action comes after a New York Times column accused the website of hosting sexual videos of underage and nonconsenting women. In response to the Times’ article, Visa and Mastercard cut ties with Pornhub, making it impossible for Pornhub to...

2. Also in 2020, Onlyfans banning “sexually explicit” content from its platform

OnlyFans said the decision was taken to comply with requests from its banking and payment providers.

3. GoFundMe and the trucker convoy fiasco

Thanks to the championing of Dr. Jennifer Robson and others, GoFundMe seized funds and offered a refund to people who filled out a form after determining that the occupation violated their terms of service prohibiting the promotion of violence and harassment.

Dr. J Robson @JenniferRobson8

I'm coding while listening to #SECU testimony from crowdsourcing fundraising platforms & processors. Head of Go Fund Me says, City of Ottawa reached out on Feb 2-4 to advise of occupation activities & laws violated. Event B after A doesn't mean A caused B, but... 🤷‍♀️

This pushed the money to places like the Christian “GiveSendGo” and to decentralized currencies.

The Logic @the_logic

ICYMI: Fundraiser for trucker protest demonstrates the case for Bitcoin—like it or not. @clabrow & @davidreevely report.

buff.lyFundraiser for trucker protest demonstrates the case for Bitcoin—like it or not - The LogicEffort shows how digital coins limit government, law-enforcement control of economic activity

4. Minister Freeland’s announcement freezing accounts linked to protests, citing terrorist financing laws.

Maybe not the best example here, given the connection to terrorist financing laws (concrete policy), though it is an example of disciplining a bank account in lieu of the person.

CBC Ottawa @CBCOttawa

Banks have started to freeze accounts linked to the protests, Freeland says ift.tt/QvPgmOH #ottnews #ottawa

5. General monitoring of purchases to find potential indicators of crime

Suspicious transaction reports were cited as a failure point in a recent Globe and Mail article, “Nova Scotia gunman left a trail of financial red flags, but none were caught by regulator”

6. Patreon’s suspension of an NGO account collecting money for the Ukrainian military

The page violated Patreon’s policies on funding military activity.

The Verge @verge

Patreon suspends NGO account collecting money for Ukrainian military theverge.com/2022/2/25/2295…

7. Meanwhile, Airbnb (where I used to work from 2017-2019) has emerged as a platform on which people can send money directly to people in Ukraine.

The platform is waiving all guest and host fees in Ukraine.

The Conversation @ConversationUK

A behavioural scientist explains why we make unhelpful decisions about charity and activism: "When you are considering acting in response to the Ukrainian crisis, it can be helpful to identify responsibility utility in your own motives."

bit.lyWill booking an Airbnb help Ukraine? Why people make counterproductive decisions about charityMany well-intentioned people are supporting counterproductive efforts to help Ukraine. Behavioural science can explain why.

In these ways, payment processors are exerting influence on people’s behaviour; in essence acting as an extension of self-regulation. In the absence of government policy we are relying instead on a mix of “know your customer” rules, terms of service and appeals to soft “community standards” stepping in for the state.

*Sanctions are the most powerful example, and these feel distinct given the geopolitical implications.

Payment service providers have the power to dictate the terms by which entrepreneurs may earn money from their content creation, the circumstances under which people can solicit donations from peers, and other financial implications of donating to a politicized cause.

We have seen that the App Store and Google Play can function as regulators of the markets they oversee, arguably more effectively than any single government. Payment processors are part of a much larger trend of digital market capture that leverages payment infrastructure for online content compliance. On a digital infrastructure level, payment service providers are as essential to online commerce as ISPs, and they are an unsatisfying stand in for a government. They are a kind of platform of platforms, or gatekeeper of gatekeepers.

We should pay close attention to the activities of PSPs that we appeal to as intermediaries on behalf of the state, and clarify acceptable terms of engagement by moving forward with platform regulation efforts. Otherwise, electronic payment processors will retain the sole power to dictate the activities people can participate in to earn money from goods or services.