Sharda Caro-del-Castillo, former Head of Payments, Airbnb
How did you initially get involved in this practice area?
I was introduced to Payments and Payments law through a series of mentors who helped guide my early career. After graduating from law school, I started my career as a technology transactions attorney during the dot.com boom at Silicon Valley Bank. Given the Bank’s heavy focus on early stage technology companies, I was exposed to tech disruption at the same time that I was exposed me to banking regulations and global money movement. I deepened this understanding once I got to Wells Fargo Bank, where I was guided to leverage my technology background to work on payments related products and partnerships. Over the course of my career at Wells Fargo, I learned the “ins and outs” of money movement, and some of the critical players in the market that helped move that money effectively. The space was so intriguing to me given its relevance to everyday life as well as global commerce; I was quickly hooked and have continued to navigate my career to grow both in legal and business roles at a variety of Fin Tech companies.
Tell us why you love this area of the law?
Payments law is a relatively new body of law in the way that it is practiced today. Historically, money movement was controlled by banks as regulated financial services institutions. With the introduction of companies like PayPal and the advent of mobile payments, this body of law has grown materially to cover a wide variety of consumer protection and regulatory issues. As luck would have it, these technological developments were happening around the same time that we underwent the market crash of 2008, which resulted in some of the most broad sweeping regulatory changes in decades. As a Payments attorney, it’s hard not to be excited by the opportunity to continually innovate and challenge historic norms while practicing law.
What are the most interesting developments in the financial services sector for eCommerce, online and offline payments?
While there are many interesting things going on in the financial services sector (e.g., cryptocurrency, cross border p2p payments, mobile point of sale devices, new twists on credit and debit cards), I think that the growth of service platforms for consumer products is a really interesting area of focus. Platforms are generally two sided, with money coming in and needing to be paid out by the platform; that said, the platform doesn’t typically provide the goods or services that are being delivered. This gives rise to the need for customized risk models, partnerships for both acquiring and paying out, as well as customized consumer protection considerations around payment disputes and complaints. A global platform takes these issues to a whole new level of complexity, particularly as laws evolve to account for this business model.
What are the risks currently facing technology companies regarding payments?
Data security and privacy are two of the issues that come to mind immediately given the current focus on these issues and the data breaches that continue to get press. Perhaps less obvious is consumer protection risk as technology continues to evolve and it’s hard to know for sure how consumers and regulators will react to new products and ways of operating. Final area I’d highlight is business interruption risk, particularly for earlier stage Fin Tech companies. Many of them are thinking early about regulatory oversight and compliance so that they can mitigate the risk of unlicensed activity or enforcement actions, but for those that don’t think about these areas early enough it can be a material risk.
What are the next steps in the development of federal and state regulations in payments?
There is a lot of attention right now is on crypto currency so I imagine that we’ll see some developments in that space. Data privacy and security of payments data is also a space where we should expect greater regulation as we see more regulators adopt legislation modeled after the General Data Protection Regulations (GDPR) in Europe. Federal regulation of money transmitters (i.e., bank charters for Fin Techs) is an area that has already started to gain traction and it will be interesting to see how it continues to evolve. Needless to say, as we continue to see innovation in payments (aka Fin Tech), there will be no shortage of areas for regulatory change!