10 2017 | BUSINESS

 11 The new legislation by the EU established mandatory Know Your Customer (KYC) procedures. © Shutterstock

»The new thresholds are  very user-friendly! «

Dr. Hartwig Gerhartinger is Paysafe Group’s Vice President Regulatory and Governmental Affairs and was closely involved in the EU negotiations concerning the Anti-Money Laundering Directives 4 and 5. In a chat with PIN Magazine, he explains why the threshold for the application of a Full Customer Due Diligence (FDD) process is crucial, and why merchants can rely on steadily increasing paysafecard  transaction volumes after June 26.

Anti-Money Laundering Directive (AMLD) 4 is now implemented in many European member states. What are the implications for paysafecard and its business partners?
We are very well prepared for the new rules as we’ve monitored the legislative process right from the start. In the negotiations at European level it was important to us that the European legislators acknowledged the low-risk character of certain e-money products like paysafecard, which lead to an exemption from the Customer Due Diligence requirements for non-reloadable e-money products up to a face value of € 250 in AMLD4. This was a big achievement for us. In parallel, we have been strengthening and further developing products like ‘my paysafecard,’ which allows for a  smooth and easy registration for customers that would like to go beyond this threshold. This product also makes our offering fit for any national legislation providing for stricter AML requirements in their local regulation trans  posing AMLD4. Another key aspect for us in the negotiations was the risk-based approach, which  enables  obliged entities to apply Simplified Custo mers Due  Diligence (SDD), a customer  relationship up to certain limits  in-line with the risk profile of  relationship. This is an important factor to  create a frictionless registration process for “my paysafecard” customers and enables by far the  biggest part of our customer base to use “my paysafecard” for online payments without having to go through Full Customers Due Diligence (FDD).

Could you be more specific here and tell us how high the new thresholds are, and what that means for customers?
Under AMLD4 users of a paysafecard PIN can still buy and use the PIN for online payments through out Europe as they use to do today. For the “my  paysafecard” product we envisage to keep the general structure as a two-staged product. This will include a standard account under the SDD process, which enables the customer to transact up to  certain limits, giving them the choice to upgrade their account to increase limits and further functionalities. In-line with the risk-based approach we envisage  moving away from a yearly transaction limit (currently € 2,500) towards a monthly transaction limit of € 250 for the standard account. For this stage, the  customers will only be asked to enter basic identification data, such as name, address, date of birth. This free registration only has to be done once. After that, they can pay by typing in a username and password, because all PINs will be stored and managed via their new account. This user data only needs to be verified by documents, such as the scan of a passport, and a face scan if the transaction volume exceeds € 250 per month. Our experiences in Greece, Romania, and Bulgaria show that the bulk of paysafecard users stay well below the € 250 mark per month, and have absolutely no  problem with registering for a  “my paysafecard” account. Greece is a very good example, as most of our users switched to “my paysafecard”  after anonymous online payments were banned there in March of this year.


»Registration for my paysafecard could be made very simple for the biggest part of our customer base.«

- Dr. Hartwig Gerhartinger,

Vice President Regulatory and Governmental Affairs Paysafe Group 

Did paysafecard have a say in defining these thresholds? 
Yes, we basically had a say in choosing an amount we thought was reasonable. The reason for this is the so-called risk-based approach, which was strengthened under AMLD 4. Under the risk-based approach obliged entities are entitled to apply SDD in case their risk assessment shows a low risk of money laundering. The outcome of the risk assessment largely depends on the abilities to efficiently mitigate any risks associated to the product and its use. Also here, paysafecard has been ahead of the curve, as we have constantly been investing substantial amounts in time and money into enhancing our transaction monitoring system and other controls over the past years. Furthermore, we have established an excellent technical integration with our merchants and distributor, which boosted our capabilities to risk mitigation capabilities. It is not least due to these efforts that we are now in a  position to offer thresholds that are very favorable for both merchants and customers.

One of the aims of the revision of the AMLD 5 is to abolish all anonymous online payments. Wouldn’t that be a big challenge for a product like paysafecard?
No, our data shows that the anonymity when paying is not at all the main driver for the use of paysafecard. Our customers rather value the fact that they can use cash to fund their online spending. This gives them full control over their online spending and avoids the risks of credit card and phishing fraud for online payments. Our data also shows that paysafecard users therefore prefer paysafecard over their bank account or credit card for online spending. And, last but not least, our customers trust that their data is safe and secure with us.

What does the new directive mean for merchants’ transactions with paysafecard? Do they have to adapt their procedures under the new law?
AMLD 4 and AMLD 5 do not result in any additional work for our merchants. The integration via API Interface facilitates making any necessary adjustments without any efforts by our merchants. However, merchants can actively support the customer transition to “my paysafecard.” To this end, we have developed a data protection compliant solution for sharing data to facilitate the registration and sign-up process. In a nutshell, the data is used to automatically prefill the customer data for the “my paysafecard” registration during the payment process. That leads to an even smoother user experience.