Emerging Payment Systems

We advise clients on existing and proposed regulations relating to anti-money laundering compliance requirements in the U.S. and internationally. In addition, we provide frequent advice on the global anti-terrorism and trade embargo laws and regulations which may impact the emerging payment industry.

With experience representing banks and similar financial institutions, we help nonbank clients structure novel payment methods to avoid unauthorized banking or cause the service provider to be classified as a bank. When banks are involved, we advise on compliance with bank regulatory requirements, as well as how to structure programs in a manner maximizing any availability of “pass-through” deposit insurance or other depository arrangements.

Emerging payment systems are not just mobile, many include or adapt traditional “cards” in new forms such as codes or other electronic variations. We help clients issue, accept, contract for, and comply with regulations regarding a wide variety of traditional and emerging products.

For example, we assist:

• issuers of general prepaid cards or e-money (such as in the U.K and EU)
• financial institutions needing compliance assistance
• retailers negotiating payment processing contracts and dealing with card brand rules
• retailers issuing store debit cards, gift cards or gift certificates
• issuers of transit cards “swiped” on the bus, ferry, or van
• retailers with Payment Card Industry standards questions
• financial institutions and retailers having payment system questions (e.g., clearinghouse rules such as ACH)

The firm has an active Consumer Financial Services practice spread among several offices. We advise payment system participants on the full range of consumer financial protection laws. With our presence in Washington, D.C. and Brussels, we are well-positioned to work with regulators on behalf of clients, including clients in the United States, with the new Bureau of Consumer Financial Protection. Our Consumer Financial Services Group is consistently ranked highly in national rankings of such practices. The 2011 edition of Chambers USA again ranked the group in the top tier, the highest possible ranking in the area of “Financial Services Regulation: Consumer Finance (Compliance)."

A variety of privacy laws apply to mobile payment systems, including separate privacy regimes that can apply to telecommunication carriers, financial institutions, and “non-bank” partners. Compliance can be challenging in an arena of small screens, GPS “tracking” capabilities, disclosure and consent requirements, and demands for simplicity, all at the same time. K&L Gates has per-country, and international privacy and data protection practices that we adapt to the payments arena in light of the participants and the nature of the technologies, services, and customers. This includes our data security breach response practice and our work in the identity management or “authentication” space.

Emerging payment systems typically involve e-contracting and consumer protection disclosures that require compliance with special rules for electronic dealings. These businesses often use the Internet, so rules governing Internet commerce apply as well.

Our corporate practitioners cover a full range of corporate disciplines supporting early stage, emerging, and developed businesses. These partners facilitate the structuring, negotiation, and execution of the full range of financing transactions undertaken by our clients in a diverse group of industries, including private equity, venture capital, and debt transactions at all stages of development, both domestic and cross border, as well as IPOs. Our in-depth experience in all forms of commercial transactions has assisted our clients in achieving key strategic and commercial relationships at all levels of the business spectrum. We have one of the legal industry’s most substantial “full-market” corporate transactional and counseling practices. Our mergers and acquisitions lawyers practice on an integrated basis across our offices on four continents and can field geographically concentrated or diverse teams, as needed.

A potential hurdle in cross-border payment is a country’s foreign exchange control regime. For example, China’s foreign system has been described as “free convertibility on the current account items and restricted convertibility on the capital account items.” Along with the rapid development of cross-border economic activities, there are various emerging payment solutions, e.g., credit cards with a foreign exchange function, Renminbi (in China) settlement service for foreign e-commerce businesses via online payment solution providers, and a pilot scheme for Renminbi accounts for foreign companies. We provide legal advice to clients on foreign exchange controls with respect to both legal requirements and practical solutions for varying business models.

Patents, copyright, and trademarks of intellectual property rights create both opportunities and material risks domestically and internationally. We have broad and deep practices in patent prosecution, copyright, and trademark registration, and intellectual property and technology licensing, including software and hardware license and development agreements. Post 2011, ICANN’s dramatic expansion of the number and types of possible domain names will materially impact emerging payment systems and the firm also has a team focusing on this expanded area.

Our trademark lawyers advise on trademark selection and availability. They work closely with clients to create and implement international trademark registration programs tailored to the needs of the client. In addition, they assist clients with enforcement and protection of trademarks, as well as trademark licensing. Our trademark lawyers have extensive experience with trademark issues on the Internet and in connection with emerging technology, including emerging payment systems.

Our litigators have broad and deep experience defending companies in litigation related to highly-regulated products and services, including payment and consumer financial products and services. We have defended consumer financial service providers in significant multi-state investigations and enforcement actions by state attorneys general, and in nationwide consumer class actions.

In the United States,we advise payments industry clients on state and federal licensing and registration requirements, including money service business (i.e., money transmitter) requirements in every state. We are experienced in structuring complex arrangements to minimize licensing obligations. When licensing is unavoidable, a dedicated team of 10 full-time licensing professionals provides a full-service licensing solution for our clients: gathering required information, preparing applications, and working with state regulators to ensure a smooth and rapid approval process. We also advise on e-money and payment services licensing in the U.K. and EU.

Our outsourcing practice represents both customers and providers of outsourcing services relating to emerging payment systems. We have represented global financial services companies in innovative outsourcing transactions with mobile wireless network providers and mobile wireless device manufacturers in the U.S., Europe and Asia. We frequently advise clients on the special liability and security risks and regulatory concerns in these transactions, in addition to negotiating and drafting the transactional documents.

The firm is involved in all aspects of the policy lifecycle including early stages of policy formulation and the development and passage (or defeat) of legislation. The firm’s nationally recognized Policy practice regularly represents companies and associations before the U.S. Congress, state legislatures, and federal and state agencies with respect to financial services, privacy, security, e-commerce, telecom, competition, and consumer protection laws. Our international offices, including our office in Brussels, have complementary practices.

The firm represents clients before state and federal regulatory agencies in the United States (including the Federal Communications Commission), Europe, and Asia on a full range of regulatory compliance and enforcement matters, including regulations applicable to the provision of mobile wireless payment system services. In addition, the firm represents emerging payment system developers and distributors of and strategic partners in payment system technologies in a wide range of technology transactions, including licensing agreements, development agreements, distribution agreements, joint ventures, and marketing arrangements.