As AI use continues to expand, the payment processing industry is adapting to its widespread implementation. This can have serious implications for business owners, depending on their level of compliance and their industry.
How is AI Affecting Payment Compliance?
The use of AI is having both positive and negative impacts on payment processing. The effects vary wildly by industry. For standard businesses, AI is making it easier to integrate software with their ERP (Enterprise Resource Planning) systems and improving processing time for PCI DSS (Payment Card Industry Data Security Standard) compliance by automating parts of the compliance assessment.
For businesses that operate in legal grey areas, like the cannabis industry, the use of AI by payment processors can result in serious consequences. For example, some cannabis-adjacent businesses have been deplatformed by their accounting software or payment processors for accepting credit card payments.
While it is illegal for businesses like growers and dispensaries that handle marijuana plants directly (called “plant-touching” businesses) to process credit card transactions, it is not unlawful for ancillary businesses, or businesses that do not directly handle the plant, to process credit cards. The nuance of this distinction gets lost in the fold when AI is used to review payment transactions and flags a business as illegally accepting credit card payments when they are not.
For example, if an agricultural business sells specialized watering equipment to a marijuana grower and calls that product something like “cannabis watering system”, they could get flagged by an AI system and have their ability to process credit cards shut down.
The appeals processes for this kind of deplatforming is long and tedious.
Who Sets the Regulations?
Credit card processing regulations are set by the PCI Security Standards Council. This council is made up of a group of the major credit card companies, including Visa, MasterCard and American Express. They restrict the use of credit card transactions for cannabis businesses because marijuana is a Schedule I substance and is federally illegal in the United States. More and more, these companies are useing AI to automatate their transaction review processes.
How to Stay Compliant
It’s important to have a payment processing partner you can trust to stay up-to-date on the latest compliance standards. Non-compliance can have serious implications for your business, like fines and fees, even if you’re not a cannabis-related business. At Evolve Payment, we regularly attend training seminars hosted by the PCI Security Standards Council to ensure we are bringing the latest and most accurate compliance information to our clients.
If you’re looking for a merchant processing partner that takes compliance seriously and can help you navigate the complex regulations of payment processing, reach out to our team at 651-628-4000.