Understanding security and regulatory compliance when scaling a global marketplace

As your marketplace goes global and expands into new regions, it’s crucial to develop a deep understanding of regulatory and compliance requirements. Compliance becomes more complex when you process payments and offer financial services across borders. Building a robust compliance framework helps ensure that your marketplace continues to operate within legal boundaries, stays protected against financial and reputation risks, and maintains user trust.

Partnering with a provider who offers embedded financial solutions with strong compliance frameworks can ease your expansion. With their financial infrastructure and built-in security measures, and existing banking licences, you can focus on scaling your business instead of navigating intricate compliance frameworks.

Here, we’ll explore the key considerations for ensuring security and compliance during global expansion. Gain an understanding of how embedded finance solutions can simplify compliance for your marketplace, helping you ‌scale fast and securely.

What you need to know about compliance when scaling globally

Expanding into new markets means navigating unique legal requirements for payments, data privacy, tax reporting, and fraud prevention. Staying compliant across regions typically involves keeping up with changing regulations, engaging with local regulatory bodies, and adapting your operations accordingly.

1. Handling cross-border transactions requires careful attention to currency exchange and payment regulations.

These regulations often vary across countries. For example, different countries have different rules on how exchange rates are determined and applied. Some have fixed exchange rates while others have floating rates. Some countries impose restrictions on the amount of foreign currency that can be exchanged or taken out of the country.

2. Adhering to data protection and privacy laws is crucial for secure cross-border payments.

Cross-border payments often involve the transfer of personal and financial data. These must be handled in compliance with relevant regional data protection laws, such as the General Data Protection Regulation (GDPR) in the EU. It's essential for marketplaces that process payments to have robust security measures in place to safeguard sensitive information from breaches and cyber threats. 

3. Addressing tax compliance is vital to avoid legal pitfalls and build trust.

Processing payments or delivering payouts often requires adherence to region-specific tax obligations. For example, US-based marketplaces that pay out contractors may need to comply with regulations such as the 1099 tax form requirements. Ensuring compliance with tax regulations is crucial for maintaining the trust and security of all parties involved and for avoiding legal and financial penalties.

4. Proactive measures are necessary to mitigate the risk of fraud and financial crime. 

For marketplaces handling payments, maintaining trust and compliance requires proactive measures to combat fraud and financial crime, such as unauthorised transactions, money laundering, and account takeovers. For example, having strict verification processes that check your merchants’ identities and the source of their funds helps prove the legitimacy of their transactions, while ensuring your compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. Regular transaction monitoring, security audits, and risk assessments can further fortify your compliance framework.

By prioritising these aspects, your marketplace can become a secure and trustworthy environment for merchants and customers.

Simplifying compliance with embedded finance solutions

Partnering with an embedded finance provider can significantly streamline your compliance efforts. These providers bring established financial infrastructure, global licences, and advanced payments security measures, enabling you to meet regulatory requirements while reducing operational costs.

Here’s how the right embedded finance partner can help:

🟠 Provide local regulatory compliance support

An embedded finance provider with built-in support for country-specific financial regulations can greatly simplify compliance for your marketplace as you operate globally. With local regulatory compliance taken care of, you can operate confidently and focus on growth, knowing that you are compliant and up-to-date on the latest regulations in each market.

Look for an embedded finance provider that offers APIs to handle complex compliance requirements, such as Know Your Customer (KYC), Know Your Business (KYB), and Anti-Money Laundering (AML) checks. By automating these processes, your marketplace can onboard merchants faster with fewer manual errors.

🟠 Streamline compliance for cross-border transactions and foreign exchange (FX)

Embedded finance solutions can enable your marketplace to manage multi-currency cross-border pay-ins and payouts efficiently, while ensuring compliance with FX regulations and reporting requirements. Embedded finance providers can streamline these processes and address tax laws, trade restrictions, and local payment preferences. With their support, you can optimise the entire payment flow, reducing delays in both receiving payments and making payouts due to currency conversions, regulatory checks, and other administrative hurdles.

🟠 Provide global licensing

Partnering with embedded finance providers that hold the necessary financial licences in various markets can significantly reduce your time-to-market during global expansion. You can avoid the time-consuming, costly process of securing and maintaining them on your own. Since you don’t have to worry about regulatory approvals, you can enter new markets faster with minimal operational disruptions and focus your resources on other areas like product development.

🟠 Enhance data security

Security is a cornerstone of compliance, especially when handling sensitive financial and customer data. Maintaining the highest data security standards for secure payment processing helps you maintain customer trust and avoid legal issues. Embedded finance providers with robust security protocols, such as encryption, tokenization, and advanced authentication methods, help ‌safeguard your marketplace against breaches and unauthorised access. These measures help protect customer data, detect fraud in real-time, and support compliance with industry standards like the Payment Card Industry Data Security Standard (PCI DSS). Access to real-time fraud detection systems powered by advanced algorithms and machine learning can reduce manual effort and human error, further optimising your marketplace’s security.

Airwallex: Your trusted partner for marketplace compliance

Power global payments and support your merchants’ global ambitions in a compliant, secure, and efficient manner with Airwallex Embedded Finance solutions.

Airwallex holds over 60 global banking licences and adheres to world-class security standards, such as SSL, TLS, SOC1 and SOC2, and PCI DSS. We offer secure and reliable financial infrastructure on a global scale. By simplifying the processes of global compliance for you, we ensure your marketplace and merchants remain compliant no matter where you choose to operate. You can focus on delivering exceptional experiences to your customers.

By integrating with secure and globally compliant financial infrastructure, your marketplace can confidently enter new markets, build trust, and maintain a strong reputation. At the same time, you give your merchants the tools they need to scale fast and securely, fostering customer loyalty and long-term growth.

Discover how Airwallex Embedded Finance solutions can help your marketplace scale and stay compliant with global payments regulations.