What Payments and Fintech Companies Need to Know to Manage the COVID-19 Outbreak

6 min

The payments and fintech industries power our country's economy by providing consumers and businesses of all sizes access to payment processing, financing, and other services that facilitate economic transactions. As the coronavirus (COVID-19) pandemic continues to impact the U.S. and global economies, the payments and fintech industries must prepare to face the numerous challenges that lie ahead.

Managing these trials will require a combination of innovation and teamwork. We know the payments and fintech industries are up to the challenge.  As your legal partners, we are ready to do our part – we want to make sure our clients prosper in the long run.

For the most up-to-date information, click here to access Venable's COVID-19 resource center, which provides a broad array of articles updated daily with new content. In the meantime, we offer below some preliminary tips for managing the imminent legal, regulatory, and business challenges that are likely to impact your company and employees in these unprecedented times.


Senate Passes CARES Act – One Step Closer to Historic Stimulus and Economic Relief

On March 25, 2020, the U.S. Senate passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to provide relief to the American people and American businesses in response to the coronavirus (COVID-19) pandemic. The measure provides direct financial aid to American families, payroll and operating expense support for small businesses, and financial assistance for distressed industries. The CARES Act now moves to the House for vote, where it is expected to be adopted in substantially the same form. From there, President Trump is expected to sign the bill into law.

One of the core pieces of the CARES Act is the provision of $349 billion for small businesses through federally backed loans under a modified and expanded Small Business Administration (SBA) 7(a) loan guaranty program. With businesses around the country struggling to maintain operations and payroll in response to the COVID-19 pandemic, Congress has designed the program to make funds available to qualifying businesses quickly and through traditional and new lending channels.


Recognize the Role of the Financial Services Industry as a “Critical Industry” under Federal and State Plans

Financial services companies and their workers are being deemed critical infrastructure as states continue to shut down non-essential businesses. Federal guidance issued by the Cybersecurity and Infrastructure Security Agency includes “financial services” on a list of critical infrastructure for states and localities to consider as they develop responses.  Examples of these types of workers include workers needed to process and maintain systems for processing financial transactions and services, such as payment, clearing, and settlement services.


Keep Your Business Running and Maintain Customer Relationships

The COVID-19 pandemic has forced businesses to make significant adjustments in day-to-day activities with very little chance to prepare. In response to these challenges, review your contracts to ensure deadlines and deliverables continue to be met, and make adjustments if needed. Do not assume that a contract’s force majeure clause will apply, because it is often dependent upon the language of the agreement and may require a careful analysis of the law of the jurisdiction that governs the contract.


Take Steps to Manage Employees Working Remotely

Telecommuting has become a way of life as we learn to cope with COVID-19. Mandatory telecommuting may lower the risk of community spread, but it also presents new challenges for managing employees. Here are five tips employers should consider as they adjust to their new virtual workplaces.

  • Tip 1: Execute a Telecommuting Agreement with Employees
  • Tip 2: Protect Confidential Information
  • Tip 3: Establish Remote Timekeeping Procedures for Non-Exempt Staff
  • Tip 4: Embrace Assistive Technology to Keep Employees Engaged
  • Tip 5: Remind Employees That Telecommuting Is Not a Permanent Replacement for Working within the Employer's Workplace

Track New Emergency Employee Benefits Requirements

Congress has drafted emergency legislation, the Families First Coronavirus Response Act (the "Act"), to provide employees paid family and medical leave and paid sick leave in response to the COVID-19 pandemic. The Act will take effect on or by April 2, 2020. The Act creates two new emergency leave benefits for eligible employees: (1) emergency paid family and medical leave and (2) emergency paid sick leave. The Act generally applies to employers with fewer than 500 employees; certain exceptions are discussed in this alert.


Manage Cybersecurity and Fraud Risks

As payments companies move to a remote work environment, it’s important that they take cybersecurity precautions. The best practice for ensuring telework cybersecurity is deploying tailored strategies to fit the particular concerns of your telework environment. It is important to update your current IT policies to reflect these strategies. Be aware of the different cybersecurity concerns that exist depending on the methods employees will be using to access the company network. Implementing multi-factor identification and multiple encryptions for access to the network is a good step to increase your security profile. Another strategy is using a tiered approach to telework access that is based on the sensitivity of information and the systems the user is granted access to. For employees teleworking, they should connect to secure wi-fi environments - consider using VPN technology to provide an extra level of security for teleworkers.


Keep Up with Risk Management Responsibilities
  • Keep Track of Regulatory Developments – Federal and state regulatory agencies have indicated they will continue to move forward with investigations where possible, particularly investigations that do not (or have not) required in-person interviews or investigative hearings. Similarly, while a slow down in agency rulemaking can be expected, agencies have indicated they will continue to move forward, even if at a slower pace.
  • Don't Facilitate Coronavirus Scams - The Federal Trade Commission (FTC), the Food and Drug Administration (FDA), and state attorneys general acted quickly to warn consumers about scammers capitalizing on Coronavirus fears. In February, the FTC warned of scammers setting up websites to sell bogus vaccinations and other products and using various scams to access banks accounts and personal information, including through emails falsely claiming to be from the Centers for Disease Control and Prevention (CDC). And most recently, the Department of Justice announced its first enforcement action against a company engaged in coronavirus-related fraud. Please click here for more information.
  • What Can You Do to Help Consumers? – Federal and state regulators have issued guidance advising financial institutions to take steps to assist consumers and businesses struggling in the wake of the COVID-19 pandemic. The federal banking agencies, along with the other member agencies of the Federal Financial Institutions Examination Council (FFIEC), have issued guidance jointly encouraged financial institutions to meet the financial needs of customers affected by COVID-19. Similarly guidance has been issued by the California Commissioner of Business Oversight on how financial institutions can help consumers, such as by waiving overdraft fees, providing new loans on favorable terms, and various other accommodations. And in New York, the Department of Financial Services has issued a rule requiring regulated financial institutions to provide accommodates to consumers.