By Dale S. Laszig
The concept of transparency has been coming to the fore in news, webinars and panel discussions across numerous business sectors, including merchant services. I've asked industry leaders how to leverage this trend. Some see it as a core value; others say it's mostly aspirational, since achieving full transparency is a nearly impossible goal.
Anand Inamdar calls transparency "the new currency in the modern workplace." His Jan. 10, 2017, blog post titled "Building a winning team with agile performance management," defines transparency as being clearly perceptible. Transparent managers instill trust and improve team performance, he noted. "When there is a sense of trust between the manager and the team member, performance [review] discussions are more inclined towards making the process [a] win-win for everyone involved," he wrote.
Transparency is mandated in the cannabis industry, where participating merchants are deemed high risk and have restricted access to traditional banking and merchant services channels. Fintechs are filling that gap with innovative processing systems that accommodate disclosure requirements. In a panel discussion at the 2019 Mobile Payments Conference, three leading cannabis service providers reviewed how next-gen payment solutions help address regulatory requirements and improve the customer experience.
Brianna Moriarty, partner development manager at Star Micronics, pointed out that accurate reporting is a baseline requirement for achieving and maintaining compliant cannabis businesses. Star Micronics POS solutions help merchants simplify compliance by validating customers, keeping transactions within state regulated limits, and providing compliant receipts and reporting, she stated.
"For the industry as a whole, not having transparency in payments makes it more difficult for banks to accept money, comply with KYC and legitimize cannabis transactions," she said. "Inaccurate receipts may also raise consumer concerns and increase chargeback risk."
Dustin Eide is CEO at CanPay, a debit payment platform for the cannabis industry. The CanPay payment network launched in November 2016 and currently serves over 300 dispensaries and recreational shops across 19 states while continuing to expand. "We're legitimately serving the cannabis industry, and tens of thousands of consumers who use our app no longer have to go to the bank before visiting a dispensary and find transactions are quicker," he stated. "We only allow companies that operate within FINCEN guidelines to accept CanPay. Our funds are not commingled, and transactions are traceable and trackable."
CannaTrac Technology Inc. deploys CannaCard, a HIPAA compliant cashless payment platform designed to provide consumers and merchants with ease of use and financial institutions with transparency and due diligence to satisfy regulatory requirements. Thomas Gavin IV, the company's CEO and vice chairman, recalled a visit to a cannabis dispensary where transactions were being processed as tire sales. "Inaccurate or misleading receipts, where transactions are being charged as retail or ATM withdrawals, make it difficult for end-users and banks to get behind this market," he said.
The $1 trillion equipment leasing and finance sector is complex and evolving, as next-gen technologies transform legacy systems into agile service offerings. The Equipment Leasing and Finance Association created its 6 Principles of Fair Business Practices in 2006. Transparency is an integral part of these standards, which model industry best practices, as follows:
ELFA members believe that all business agreements, arrangements and transactions should be conducted with transparency with respect to the roles and responsibilities of all parties. Full disclosure in and clarity of transaction documentation is a key element of such transparency.
We believe that all member companies should conduct their business relationships with suppliers and customers in a fair and reasonable manner and should comply with the letter and spirit of applicable laws and regulations.
We believe that all member companies should encourage, to the extent reasonably practical, that all parties to a business agreement, arrangement or transaction (including members' customers and suppliers) operate consistent with these Principles.
We believe that it is incumbent upon members, and the Association on members' behalf, to promote education and awareness such that all parties to business dealings consult, where necessary or appropriate, their professional advisors.
We believe that business transactions and related activities should be conducted with integrity and the highest ethical standards.
Finally, we believe that it is incumbent upon members, and the Association on members' behalf, to promote education and awareness of these Principles.
Deborah Reuben, president at Reuben Creative LLC and ELFA board member, stated, "B2B finance customers are demanding speed, control, and transparency in their finance relationships, desiring instant access to data about their equipment leases and loans." She explores these themes in her digital transformation consulting, keynotes and finance industry workshops.
Christopher Murray, attorney with Stein Adler Dabah & Zelkowitz, specializes in commercial disputes, merchant cash advance, usury law, insurance law and commercial collections. At Broker Fair 2019, a lending conference hosted by deBanked, Murray and fellow panelists Katherine Fisher, partner at Hudson Cook LLP; Lindsey Rohan, attorney at law, Platinum Rapid Funding Group Ltd; and Steven Berkovitch, partner at Berkovitch & Bouskila PLLC assessed the impact of ever-changing regulations on the alternative lending industry.
"The FTC wants to know the small business lending space better," Murray said. "They want to look at lenders, sales agents and funding entities held responsible for agent behavior."
Noting that the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 made it illegal for financial service providers to engage in unfair, deceptive or abusive acts or practices, Murray urged audience members to check facts whenever they sign an affidavit and offered the following suggestions for achieving and maintaining compliance and best practices:
Chad Otar, CEO at Lending Valley Inc., agreed, stating, "Transparency must be embedded into every aspect of organizational culture, starting at the top, with articulate leaders letting people know where they stand. Use common language at every level; big words can confuse people."
If I were to summarize my biggest takeaway from these thought leader interviews, it would be: do the right thing for the right reasons. If business owners behaved ethically, they'd have nothing to hide, and transparency would not be an issue.
Dale S. Laszig, senior staff writer at The Green Sheet and managing director at DSL Direct LLC, is a payments industry journalist and content development specialist. She can be reached at email@example.com and on Twitter at @DSLdirect.
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