Regulatory technology or “RegTech” helps entrepreneurs maintain compliance with various regulatory requirements in an efficient and cost-effective manner.
Payscout, which provides RegTech solutions for merchants in a wide array of verticals, has developed their solutions over time by deploying a surprisingly simple framework: Education, Enablement, Enforcement, and Evolution (the four E’s).
In a complex ecosystem such as the payments industry, financial regulation impacts every element of the system, from the consumer and their issuing bank, to the merchant, acquiring banks, service providers, and many more. All of those individual groups represent key stakeholders in the system.
Decisions that impact the group should begin with a process of Education, wherein all stakeholders are engaged at the outset. By beginning with education (and ensuring all relevant stakeholders are engaged in the process), both regulators – and the systems providers who help business owners navigate compliance issues – share all of the available information for use in creating the most optimal outcomes. Good examples of the education phase in action include events such as the Electronic Transactions Association’s Fly-In and FinTech Policy Forum, of which Payscout is an active, year-round participant. The events provide a forum for stakeholders to come together and bilaterally engage in the education process.
The second stage is the Enablement phase, which refers to the development of policies, processes, and systems that enable entrepreneurs to conduct business in a compliant manner. Payscout, at its core, is a systems provider who builds the processes that enable merchants to conduct payment transactions in a compliant manner. It is essential that the enablement phase (the development of systems) follows, as opposed to preempting, the education phase.
The third stage is Enforcement, and this refers to the critical steps required to remove bad actors from the systems once they have been developed and deployed. Enforcement is an essential part of any functioning system, but like the Enablement phase, it is critical for this stage to follow and not precede Education and Enablement. Only after all stakeholders have been meaningfully engaged in Education, and systems have been developed on the basis of that education, should enforcement be undertaken. If and when enforcement precedes Education, the system begins to break down.
Lastly, Evolution refers to the necessary contiguous nature of the regulatory environment and the need for the systems that support it to continue to mature. The key in this phase is to return the cycle to Education, specifically, by reviewing and evaluating what worked and did not work in the policies, procedures, systems, and enforcement inherent in the regulation.
The Four E’s model has broad implications, but in RegTech, it serves as an essential foundation for sound regulatory policy.
Contact Sales@Payscout.com today to learn more about how our RegTech solutions can help you grow your business responsibly.