The economic crisis arising from Covid-19 has brought into sharp focus the challenges that payment service providers have with customers and merchants who find themselves in either a distressed financial state, and/or entering into formal insolvency procedures across a multitude of jurisdictions.

All providers of finance and working capital to retailers will be deeply concerned about the solvency of customers and merchants. Those payment service providers operating in the cards space will have the additional burdens of potential liabilities such as chargebacks and refunds, which in the current economic market can be enormous.

The focus of merchant acquirers and card acceptance providers is therefore on two things; firstly the quality of the contractual rights of recourse that are available in merchant services contracts, and secondly the retention and development of funds to set off the potential substantial liabilities from the card schemes, and at the same time seek to support distressed retailer customers and merchants. The issues for payment service providers faced with these circumstances also require an understanding of the regulatory challenges that arise in this sector, as well as how insolvency and bankruptcy legislation is applied by jurisdictions across the globe. 

Payment providers also have to remain mindful of their regulatory responsibilities.  In some respects, regulators have been helpful, providing extensions for implementation of some new incoming regulatory requirements, or indicating that regulatory forbearance may be forthcoming. In other areas however regulatory focus has increased, particularly with regard to fraud. This is down to criminals increasing their focus to trying to divert online payments as opportunities for other types of fraud decrease.

On 27 May at 3pm DLA Piper will be running a ?Payments in the Pandemic? webinar, joined by Briony Krikorian-Slade and Austin Elwood from UK Finance to discuss in more depth some of the key issues and developments for payments providers during the pandemic. Click on the link to join us: https://www.dlapiper.com/en/uk/insights/events/2020/05/payments-in-the-pandemic/27-may-2020/