🏦 payment processing
In lieu of platform regulation, policymakers are leaning (too?) hard on payment processors
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.
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.
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.
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.
This pushed the money to places like the Christian “GiveSendGo” and to decentralized currencies.
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.
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.
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.
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.
📖 In April, I am interviewing A Visit from the Goon Squad’s Jennifer Egan about her new book, The Candy House. 🍬
📺 Watch the book trailer ahead of the book’s release.
🎙️ We got to speak to Michael Geist about competition.
🗞️ The National Post had a special message just for me.
Vass Bednar has a crush on you. 💖