In her annual report on Internet trends, Mary Meeker, venture capitalist and influential technology observer, noted that the rise of mobile connectivity and the increase of online marketplaces such as Shopify and Etsy, and platforms such as Uber, Grabb and Airbnb, are changing the way an increasing number of people pay and get paid.
I like this observation, because it illustrates the transformation in the payments industry. Payments used to be the domain of banks, but no longer. Changing consumer behaviour, new business models, and technology innovation are rapidly democratizing payments. As barriers to participating in payments fall and the systems become dizzyingly complex, there are calls for increased transparency, efficiency, and consideration of the public interest. Payments has become social infrastructure, invested with a public dimension comparable to utilities, roads, and health care.
Not surprisingly, policymakers and regulators in Canada, and around the world, are scrambling to understand and address the potential risks associated with the new payments landscape.
In the past year, the Canadian federal government has amended anti-money-laundering and terrorist financing legislation, modernized regulations around how financial service providers can identify their customers, expanded the oversight powers of the Bank of Canada, increased the accountability and governance of the Canadian Payments Association, and extended the code of conduct for the credit and debit card industry to apply to mobile transactions. Additionally, the Bank of Canada and the federal Department of Finance have launched broad consultations on prominent payment and retail payment systems, respectively, to assess risk and consider whether further changes are required. Without hyperbole, the pace of change is breathtaking. It’s a fascinating time to be a lawyer in payments.
I was attracted to law as a career because I felt it would offer a life of continuous learning. It has helped me grow more than I ever anticipated. In the beginning of my career, I naively assumed that my education would come from leather-bound books and jurisprudential discourse. I also assumed the subject matter would exclusively be the law. I dismissed the old axiom that law students know more law at graduation than they will at any other point in their career. I still reject it. However, I can now say that I spend most of my time understanding policies, products, technology, strategies, and the markets in which my clients operate. These are the factual matrices that inform my legal analysis and counsel.
This brings me to my first point. We become lawyers by virtue of our call to the bar. But to earn a place at the table as trusted advisers, we need to draw upon more than legal acumen. There is often a fine line between legal and business risk and very rarely does one stand without the other. As in-house counsel, we are sought out for our judgment, our ability to sort through the chaff, our institutional knowledge and networks. We earn these not only from our tenure but also from our vantage and will often be called upon for those things.
This brings me to my second point. Our participation in the business must be balanced against our role as guardians of the company’s reputation and, of course, our obligations to the legal profession. In-house counsel typically has many internal clients and it is a perennial struggle to balance competing interests when they arise. Our ultimate client is the company itself, but that can legitimately mean different things to different people. For example, as regional head of the legal function in a global organization, the balancing exercise requires that I consider the needs of the regional business unit and the company’s best interests in the region and to articulate and advocate a view that addresses the company’s regional needs in relation to its global framework.
Let me conclude with an observation and caveat. As our factual matrix becomes more complex and we find ourselves, as lawyers, being drawn ever more intimately to the business almost by necessity, we will be required to play roles and perform functions that are less clearly legal in nature. This will have consequences, including for conflicts of interest and legal privilege. We must take care to be clear to our clients and, most importantly to ourselves, as to which hat we are wearing and when. Our ethical obligations demand it.
Jason Young is head of legal and business ethics officer for PayPal Canada. He is based in Toronto.
I like this observation, because it illustrates the transformation in the payments industry. Payments used to be the domain of banks, but no longer. Changing consumer behaviour, new business models, and technology innovation are rapidly democratizing payments. As barriers to participating in payments fall and the systems become dizzyingly complex, there are calls for increased transparency, efficiency, and consideration of the public interest. Payments has become social infrastructure, invested with a public dimension comparable to utilities, roads, and health care.
Not surprisingly, policymakers and regulators in Canada, and around the world, are scrambling to understand and address the potential risks associated with the new payments landscape.
In the past year, the Canadian federal government has amended anti-money-laundering and terrorist financing legislation, modernized regulations around how financial service providers can identify their customers, expanded the oversight powers of the Bank of Canada, increased the accountability and governance of the Canadian Payments Association, and extended the code of conduct for the credit and debit card industry to apply to mobile transactions. Additionally, the Bank of Canada and the federal Department of Finance have launched broad consultations on prominent payment and retail payment systems, respectively, to assess risk and consider whether further changes are required. Without hyperbole, the pace of change is breathtaking. It’s a fascinating time to be a lawyer in payments.
I was attracted to law as a career because I felt it would offer a life of continuous learning. It has helped me grow more than I ever anticipated. In the beginning of my career, I naively assumed that my education would come from leather-bound books and jurisprudential discourse. I also assumed the subject matter would exclusively be the law. I dismissed the old axiom that law students know more law at graduation than they will at any other point in their career. I still reject it. However, I can now say that I spend most of my time understanding policies, products, technology, strategies, and the markets in which my clients operate. These are the factual matrices that inform my legal analysis and counsel.
This brings me to my first point. We become lawyers by virtue of our call to the bar. But to earn a place at the table as trusted advisers, we need to draw upon more than legal acumen. There is often a fine line between legal and business risk and very rarely does one stand without the other. As in-house counsel, we are sought out for our judgment, our ability to sort through the chaff, our institutional knowledge and networks. We earn these not only from our tenure but also from our vantage and will often be called upon for those things.
This brings me to my second point. Our participation in the business must be balanced against our role as guardians of the company’s reputation and, of course, our obligations to the legal profession. In-house counsel typically has many internal clients and it is a perennial struggle to balance competing interests when they arise. Our ultimate client is the company itself, but that can legitimately mean different things to different people. For example, as regional head of the legal function in a global organization, the balancing exercise requires that I consider the needs of the regional business unit and the company’s best interests in the region and to articulate and advocate a view that addresses the company’s regional needs in relation to its global framework.
Let me conclude with an observation and caveat. As our factual matrix becomes more complex and we find ourselves, as lawyers, being drawn ever more intimately to the business almost by necessity, we will be required to play roles and perform functions that are less clearly legal in nature. This will have consequences, including for conflicts of interest and legal privilege. We must take care to be clear to our clients and, most importantly to ourselves, as to which hat we are wearing and when. Our ethical obligations demand it.
Jason Young is head of legal and business ethics officer for PayPal Canada. He is based in Toronto.
