Israeli payment tech helps keep companies off terror watch lists

Compliance with government rules and tax laws, as well as helping customers avoid doing business with suspicious characters, is part of Tipalti’s mission

A police officer stands outside a money exchange kiosk in Herzliya whose operators were arrested under suspicion of money laundering on Wednesday, October 10, 2012 (Yehoshua Yosef/Flash90)
A police officer stands outside a money exchange kiosk in Herzliya whose operators were arrested under suspicion of money laundering on Wednesday, October 10, 2012 (Yehoshua Yosef/Flash90)

In today’s hyper-vigilant atmosphere, nervous governments are looking not twice, but five times, at online activities – especially the transfer of money. With data so easy to access, there are no more secrets online, and a company can find itself the subject of an investigation if it engages with individuals who are on government watch lists.

But how would a mobile advertising firm, for example, know that an organization it bought website ad space from was engaged in questionable activities? How would an e-learning site know that the writer of a curriculum was wanted as a “person of interest” in an ongoing security investigation? The only way they could know something like that, according to Tipalti CEO Chen Amit, is by using a service like his that automates online payments.

“There are huge compliance issues in online payments,” said Amit, “such as ensuring that you deduct the right amount of taxes and pay the regulating authority. Then there is the issue of currency – who gets paid in what currencies, what rate to use when converting and how to establish the rate on the date of payment, and so on. Other than Tipalti, there is really no other system to automate this, so until we came around businesses were doing this manually – with large numbers of errors leading to misunderstandings, lawsuits, and even legal actions against them.”

There are plenty of online services that help companies and businesses bring in money that is owed to them – but there are precious few that do the opposite. That suits Amit just fine.

“There are just a few companies involved in the online payments business, and that gives us more opportunity, because there is less competition. And among the competition we are unique in that we provide customers with a simple way to pay their bills,” said Amit. “We basically outsource the whole thing for them.”

Over the past five years, the company has seen its business grow to the point where last year it did $2 billion in sales.

Chen Amit (Courtesy)
Chen Amit (Courtesy)

While the stereotype is that the typical business is always looking for ways to get out of paying its bills – and that many try every trick in the book to delay paying out until they absolutely have to – the truth is far different, said Amit. Most companies, especially the mobile firms and websites that Tipalti counts as its customers, are actually quite anxious to ensure that suppliers of goods and services get paid. Otherwise, those suppliers won’t want to do business with their firms anymore, and that could disrupt the flow of their activities and lose them market share, which could be very difficult to make up in today’s competitive economy.

Businesses cannot afford that – and they cannot afford becoming the subject of government investigations over questionable transactions that they did not even realize they were engaging in. Tipalti has their back; all customers have to do is add one line of code to their websites and they are covered, said Amit.

The system handles all payment tax and regulatory compliance requirements, including tax form collection, recording, and processing. It also ensures that all payees are not on any international anti-terrorism, anti-drug trafficking, and anti-money laundering watch lists prior to payments being made.

Beyond that, Tipalti makes it easier for suppliers to do business with a company.

“We enhance the partner payment experience to help customers better attract and retain partners by offering them choice of different payment method and currency and by improving payment timeliness and accuracy results,” said Amit. “Depending on country, Tipalti supports a variety of payment methods and is always adding more options. These include ACH (automated clearinghouse), wire transfer, Global ACH (eCheck), PayPal, prepaid debit cards, and live paper check. While payers can determine which methods are made available, the advantage for the payee is that they can choose a payment method that works best for them.”

Among Tipalti’s recent innovations is its solution for W-8 forms, which US businesses need when working with overseas sellers. While failing to file proper tax forms probably won’t merit a company an investigation for terror activities, it may very well pique the interest of the government money-laundering investigators.

“Today’s Form W-8 collection and withholding requirements are complicated and confusing and make the already difficult process of managing and paying overseas suppliers even more challenging,” said Amit. “Our new W-8 capability dramatically simplifies the process of managing and paying overseas suppliers, while ensuring compliance with the constantly changing tax and regulatory requirements.”

Most Popular
read more: