Think Payments First: Part IV

The not so fun stuff – Rules, Regulation & Compliance

At the beginning of building your business, it’s time to set the right foundations for success. Let’s face it, understanding the complex rules and regulations related to getting paid isn’t “the fun” stuff.

Not to pile on, but we feel in the early days of setting up your business, you shouldn’t be surprised by one more compliance report or one more regulation when it comes to one of your business’s most essential aspects: money.

Here’s our PSA:

Think payments first, then think about the rest.

Welcome to the fourth part of our 5 part series, all about thinking payment first:

Where to start

Take a look at this list of rules and standards set out by Payments Canada and for Credit Card processing, there is a whole lot more to know.

If you have more time for some “light” reading, take a look over some of the Payments Canada quick hits A1, A4, E1, E2, and one of our favourites, and we think should be one of your too, Rule H1Pre-Authorized Debits. Once you’ve gotten through all of that, don’t forget about privacy and all the obligations of storing your customers personal payment information.

It’s a lot to go through and what makes matters worse, you as a business owner won’t deal directly with these entities and rules. You’ll access them through your bank, merchant acquirer or payment provider, all of which will have different implementations and processes. Luckily, we make sense of this craziness and have a few tips so you can think about payments and compliance and privacy first.

Know your payment facts

Think about how much information you are gathering for a payment and how you store it. At the heart of collecting payment details is the sad thought that your customer wants their money back. Sadder or scarier, it wasn’t them that bought it in the first place.

If the owner of the card calls their provider “‘I didn’t purchase this’ do you and your team have all the necessary information on hand to say, ‘Yes, they did’?

What happens if you’d pulled the funds from their bank account? Are you prepared to be notified by your bank the day they pull the funds back from you? Do you have a valid PAD agreement and did you pull the funds according to it?

Think of it as an investigator: classic who, what, where & when.

Set up the tools and processes now in the early days to give your team what they need to crack the case wide open and make sure you are on the right side of the law and don’t end up out of pocket.

Transaction Volumes

Volume projections are incredibly important to think about as your obligations will vary.

  • How many payments could you get in a day or week?
  • How fast do those transactions happen?
  • What’s the average amount of each payment?
  • What’s the distribution across methods or providers?

If you have a large number of small-value transactions or a small number of large-value transactions, be prepared, there could be additional costs or work associated with reporting to your payments provider and/or bank. Don’t forget that your industry may factor into the amount of data you need to report and how often.

We hope you hit it big, but you’ve heard of online payments breaking or even worse massive fines being issued for data breach or non-compliance.

They weren’t prepared!

You could hit roadblocks or account restrictions if you don’t prepare your payment provider. Don’t assume that your payment provider can automatically keep up as you scale, or if you scale quickly.

If things change, or something’s coming down the pipeline to dramatically change your volumes incoming or outgoing – give them a heads up or risk interrupting your income.

Reporting History

How far back can you get your payment information, and in what format? If you aren’t actively downloading and storing your payment history, you might find yourself in a pickle. Remember to ask any payment provider how long you can access your information or download it within the tools they give you.

Some may only give you a 3-month window to get your information. Others will only give you PDFs, which aren’t very friendly to things like spreadsheets. Others might let you get more history, but you need to show up in person, sign a few documents while they charge you for someone to go down into the basement somewhere to pull up some digital archive.

If you don’t have someone downloading these reports regularly, you might have a mess that at the end of the year your accountant might not be very happy with. After all of make sure you know your obligations on how you store the information and when you are legally obliged to destroy it.

More questions?

It’s very possible, you now have a lot more questions. We’re hoping you do. 

It takes practice to think payments first. The Peloton team has been putting payments first for more than a decade. To find out how our Peloton Portal and our team can help, visit our Portal page.