PayPal Tells Gov't How to Improve Electronic Payments Regulation

PayPal (NASDAQ: EBAY) is telling global governments how they can better regulate technology companies--especially, of course, payment processors such as itself. Really. “It’s a common refrain among technology leaders that regulatory processes are far too slow to adapt. The general sense is that government cannot keep up with the rapid pace of innovation and creativity that is at the heart of today’s successful business operations,” Brian Bieron, executive director of Global Public Policy for eBay, wrote on the PayPal Forward blog this week. First and foremost, technology innovation and data analytics is needed at the government level, Bieron wrote. As a result, PayPal started “collaborative discussions” with government officials in Washington, D.C.; Trieste, Italy; and Singapore this week. The company simultaneously released reports with its recommendations. “The concept is not overly complicated. We recommend that regulators use the same data analytics techniques that have transformed the ‘high tech’ payments sector in the same way they have transformed the healthcare and getting-a-taxi industries. These techniques rely on collaboration and iteration; they use technology and data to measure performance and deliver results,” Bieron wrote. To that end, PayPal is advocating a new decision-making model called “SMART Governance.” SMART Governance combines the use of technology and data with a collaborative process to measure performance of covered entities, “creating a better informed regulatory development process,” the company said in the executive summary of its report, “21st Century Regulation: Putting Innovation at the Heart of Payments Regulation.” Governments should apply “Dynamic Performance Standards,” regulatory policies that measure results and change based upon new data and new insights arrived at through a collaborative process. In addition, governments should create a Payments Market Expert Group to apply the SMART Governance Model and remove repetitive burdens in regulations, particularly with cross-border transactions, according to PayPal’s report. Unfortunately, the jargon put forth by PayPal in this report, with its paradigms and philosophies, reminds me of an unwieldy government document. And that is exactly the kind of outdated, burdensome process that PayPal executives are urging governments to move away from.