‘Payment companies are taking a clear political stance’: Politics and payments in the wake of the Trump administration
- Should payments be politicized? As more than 400 people face criminal charges for the Capitol riots, we explore the repercussions on the payments industry.
- Experts weigh in on potential polarization and regulations in the long term.
The Capitol insurrection caused a swift public divorce between financial institutions and former president Trump along with his supporters. JPMorgan Chase, Goldman Sachs, BlackRock, Bank of America and Wells Fargo ceased their political contributions through their PACs. Payments players such as Visa, Mastercard and American Express also suspended their PAC donations to Trump and his associates.
E-commerce network Shopify closed two online stores affiliated with the ex-president, including those operated by the Trump campaign and the Trump Organization. Global payments provider Stripe declined to process payments for the Trump campaign’s website because of user policy violations regarding an incitement to violence.
PayPal blocked an account held by Joy in Liberty, a group that facilitated travel expenses for Trump supporters to gather in Washington for the riots. It also ceased operations with Christian crowdfunding site GiveSendGo which raised funds for individuals who attended the siege.
When it’s all said and done, what does the payments blockade really mean for the payments industry at large?
“These moves are quite significant as these payment companies are taking a clear political stance when there was no legal or judicial decision that would enforce such a shutdown,” said Arcady Lapiro, founder of Agora Services, a digital technology provider for banks.
Online donors contribute millions in fundraising for political campaigns in the U.S and those contributions are processed through payments platforms like Stripe.
“A financial tech company that stops processing donations will likely have a more significant impact on a candidate’s fundraising than an individual company whose PAC stops donating,” said Brendan Fischer, the director of federal reform at the Campaign Legal Center. “A corporate PAC may only give $5,000 to a candidate’s campaign, but potentially millions of dollars will flow through a payment processing company.”
The payments void created by the fallout against Trump and his allies raises the question of whether this could lead to a visible and long term political divide in the payments space.
“I don’t think so. There is a tiny percentage of extremely loyal supporters of Trump who may look for alternate payment providers not based in the U.S or pursue cryptocurrencies. Some niche players are going to emerge that would accept any business, even if it is controversial,” said Lapiro.
They might not have to. The Wall Street Journal reported that despite its announced ban, Stripe continued to process payments through alternative routes, such as the Republican fundraising platform WinRed, which supports the majority of Trump fundraising efforts.
The fall out will lead to a new wave of regulations, though, according to fintech commentator Chris Skinner.
“It does set a dangerous precedent when technology companies start to censor who can use their services as, usually, it is governments. Governments are meant to regulate the system, not corporations,” said Skinner
“Governments want to manage their societies and economies, and not have that delegated to Jack Dorsey, Mark Zuckerberg or Patrick Collison.”
Public stances of corporate censuring against Trump have also increased payment companies’ internal evaluations of merchants and the type of transactions processed.
“The January 6th insurrection has brought to light how rules against processing payments associated with ‘hate and harm’ are ill-defined,” said Deana Rich, co-founder of payments infrastructure platform, Infinicept.
“The regulations are not clear cut and many payments companies are reviewing their merchant portfolios, paying even more attention to with whom their merchants are transacting. We will most likely see payments companies closing merchant accounts if they could be associated with a hate or harm entity.”