Compliance

Ensure regulatory compliance for PayPal payouts in your Android app.

Overview

When implementing PayPal payouts, you must comply with various financial regulations, data protection laws, and industry standards. This guide outlines key compliance considerations for your Android application.

Financial regulations

Know Your Customer (KYC)

Verify customer identity before enabling payouts:

fun enablePayouts(customerId: String): Boolean {
    // Check KYC verification status
    val kycStatus = checkKYCStatus(customerId)
    
    return when (kycStatus) {
        KYCStatus.VERIFIED -> {
            // Customer is verified, enable payouts
            true
        }
        KYCStatus.PENDING -> {
            showMessage("Identity verification in progress")
            false
        }
        KYCStatus.NOT_VERIFIED -> {
            showMessage("Please complete identity verification to enable payouts")
            redirectToKYCFlow()
            false
        }
        KYCStatus.FAILED -> {
            showMessage("Identity verification failed. Please contact support")
            false
        }
    }
}

Anti-Money Laundering (AML)

Implement AML checks and monitoring:

data class AMLCheck(
    val transactionAmount: Double,
    val dailyTotal: Double,
    val monthlyTotal: Double,
    val customerRiskScore: Int
)

fun performAMLCheck(
    customerId: String,
    amount: Double
): AMLCheckResult {
    val dailyTotal = getTodayPayoutTotal(customerId)
    val monthlyTotal = getMonthlyPayoutTotal(customerId)
    val riskScore = getCustomerRiskScore(customerId)
    
    return when {
        // Flag large single transactions
        amount > AML_LARGE_TRANSACTION_THRESHOLD -> {
            AMLCheckResult.REVIEW_REQUIRED
        }
        // Flag unusual pattern
        dailyTotal + amount > AML_DAILY_LIMIT -> {
            AMLCheckResult.LIMIT_EXCEEDED
        }
        // Flag high-risk customers
        riskScore > AML_HIGH_RISK_THRESHOLD -> {
            AMLCheckResult.HIGH_RISK_REVIEW
        }
        else -> {
            AMLCheckResult.APPROVED
        }
    }
}

Transaction limits

Enforce regulatory transaction limits:

data class TransactionLimits(
    val minAmount: Double = 1.0,
    val maxSingleTransaction: Double = 10000.0,
    val maxDailyAmount: Double = 25000.0,
    val maxMonthlyAmount: Double = 100000.0
)

fun validateTransactionLimits(
    customerId: String,
    amount: Double
): ValidationResult {
    val limits = getCustomerLimits(customerId)
    val dailyTotal = getTodayPayoutTotal(customerId)
    val monthlyTotal = getMonthlyPayoutTotal(customerId)
    
    return when {
        amount < limits.minAmount -> ValidationResult(
            isValid = false,
            message = "Minimum payout amount is ${limits.minAmount}"
        )
        amount > limits.maxSingleTransaction -> ValidationResult(
            isValid = false,
            message = "Maximum single payout is ${limits.maxSingleTransaction}"
        )
        dailyTotal + amount > limits.maxDailyAmount -> ValidationResult(
            isValid = false,
            message = "Daily limit of ${limits.maxDailyAmount} would be exceeded"
        )
        monthlyTotal + amount > limits.maxMonthlyAmount -> ValidationResult(
            isValid = false,
            message = "Monthly limit of ${limits.maxMonthlyAmount} would be exceeded"
        )
        else -> ValidationResult(isValid = true)
    }
}

Data protection

Implement proper data handling for European customers:

// Data retention policy
data class DataRetentionPolicy(
    val payoutRecordsRetentionDays: Int = 2555,  // 7 years for financial records
    val personalDataRetentionDays: Int = 365     // 1 year after last activity
)

// Right to be forgotten
fun handleDataDeletionRequest(customerId: String) {
    // Verify customer identity
    val verified = verifyCustomerIdentity(customerId)
    if (!verified) {
        throw SecurityException("Identity verification failed")
    }
    
    // Check if data must be retained for legal reasons
    val hasActiveFinancialObligations = checkFinancialObligations(customerId)
    if (hasActiveFinancialObligations) {
        throw IllegalStateException("Cannot delete data with active financial obligations")
    }
    
    // Anonymise personal data
    anonymizePersonalData(customerId)
    
    // Retain transaction records as required by law
    retainFinancialRecords(customerId)
    
    Log.i("Compliance", "Data deletion request processed for customer: $customerId")
}

// Data export (right to data portability)
fun exportCustomerData(customerId: String): CustomerDataExport {
    return CustomerDataExport(
        customerId = customerId,
        personalInfo = getPersonalInfo(customerId),
        payoutHistory = getPayoutHistory(customerId),
        walletDetails = getWalletDetails(customerId),
        exportDate = System.currentTimeMillis()
    )
}

Secure data storage

Never store sensitive payment data:

// Good: Store only necessary identifiers
data class StoredWalletData(
    val customerId: String,
    val walletType: String,           // "PayPal" (Venmo has limited support on Android)
    val paypalPayerId: String?,       // PayPal payer ID (not email)
    val lastFourDigits: String?,      // Last 4 digits for display only
    val linkedAt: Long,
    val lastUsedAt: Long?
)

// Bad: Never store full email addresses or sensitive data
// ❌ Don't do this:
data class BadWalletData(
    val fullEmailAddress: String,      // Don't store
    val fullPhoneNumber: String,       // Don't store
    val fullName: String               // Don't store unless necessary
)

// Implement encryption for stored data
fun storeWalletData(data: StoredWalletData) {
    val encryptedData = encrypt(data.toJson())
    secureStorage.store("wallet_${data.customerId}", encryptedData)
}

fun retrieveWalletData(customerId: String): StoredWalletData? {
    val encryptedData = secureStorage.retrieve("wallet_$customerId") ?: return null
    val json = decrypt(encryptedData)
    return StoredWalletData.fromJson(json)
}

Security requirements

Secure communication

Ensure all API communication is encrypted:

// Enforce TLS 1.2 or higher
val okHttpClient = OkHttpClient.Builder()
    .connectionSpecs(listOf(
        ConnectionSpec.Builder(ConnectionSpec.MODERN_TLS)
            .tlsVersions(TlsVersion.TLS_1_2, TlsVersion.TLS_1_3)
            .build()
    ))
    .build()

Certificate pinning

Implement certificate pinning for enhanced security:

val certificatePinner = CertificatePinner.Builder()
    .add("api.pxp.io", "sha256/AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA=")
    .build()

val okHttpClient = OkHttpClient.Builder()
    .certificatePinner(certificatePinner)
    .build()

Authentication

Implement proper authentication for payout operations:

fun authenticatePayoutRequest(
    customerId: String,
    amount: Double
): AuthResult {
    // Require authentication for payouts above threshold
    if (amount > AUTHENTICATION_REQUIRED_THRESHOLD) {
        return requireBiometricAuthentication()
    }
    
    // Require session validation
    if (!isSessionValid(customerId)) {
        return AuthResult.SESSION_EXPIRED
    }
    
    // Verify device fingerprint
    if (!verifyDeviceFingerprint(customerId)) {
        return AuthResult.DEVICE_NOT_RECOGNIZED
    }
    
    return AuthResult.AUTHENTICATED
}

Record keeping

Transaction logging

Maintain comprehensive transaction logs:

data class PayoutAuditLog(
    val merchantTransactionId: String,
    val systemTransactionId: String,
    val customerId: String,
    val amount: Double,
    val currency: String,
    val recipientWallet: String,
    val status: String,
    val initiatedAt: Long,
    val completedAt: Long?,
    val failureReason: String?,
    val ipAddress: String,
    val deviceId: String,
    val userAgent: String
)

fun logPayoutTransaction(
    result: PostPayoutResult?,
    error: PayOutError?,
    metadata: TransactionMetadata
) {
    val log = PayoutAuditLog(
        merchantTransactionId = metadata.merchantTransactionId,
        systemTransactionId = result?.systemTransactionId ?: "N/A",
        customerId = metadata.customerId,
        amount = metadata.amount,
        currency = metadata.currency,
        recipientWallet = metadata.recipientWallet,
        status = if (result != null) "SUCCESS" else "FAILED",
        initiatedAt = metadata.initiatedAt,
        completedAt = System.currentTimeMillis(),
        failureReason = error?.errorReason,
        ipAddress = metadata.ipAddress,
        deviceId = metadata.deviceId,
        userAgent = metadata.userAgent
    )
    
    // Store in secure audit log
    auditLogRepository.save(log)
    
    // Send to monitoring system
    monitoringService.recordTransaction(log)
}

Audit trail

Maintain a complete audit trail:

sealed class AuditEvent {
    data class PayoutInitiated(
        val transactionId: String,
        val amount: Double,
        val customerId: String
    ) : AuditEvent()
    
    data class PayoutApproved(
        val transactionId: String,
        val approvedBy: String
    ) : AuditEvent()
    
    data class PayoutCompleted(
        val transactionId: String,
        val systemTransactionId: String
    ) : AuditEvent()
    
    data class PayoutFailed(
        val transactionId: String,
        val errorCode: String,
        val errorReason: String
    ) : AuditEvent()
}

fun recordAuditEvent(event: AuditEvent) {
    val auditRecord = AuditRecord(
        eventType = event::class.simpleName ?: "Unknown",
        eventData = event.toJson(),
        timestamp = System.currentTimeMillis(),
        userId = getCurrentUserId(),
        sessionId = getCurrentSessionId()
    )
    
    auditTrailRepository.save(auditRecord)
}

Terms of service

Require explicit consent before enabling payouts:

@Composable
fun PayoutConsentScreen(onAccept: () -> Unit, onDecline: () -> Unit) {
    var acceptedTerms by remember { mutableStateOf(false) }
    var acceptedPrivacy by remember { mutableStateOf(false) }
    
    Column(
        modifier = Modifier
            .fillMaxSize()
            .padding(16.dp)
    ) {
        Text(
            text = "Payout Terms and Conditions",
            style = MaterialTheme.typography.headlineMedium
        )
        
        // Terms content
        ScrollableTermsContent()
        
        // Consent checkboxes
        Row(verticalAlignment = Alignment.CenterVertically) {
            Checkbox(
                checked = acceptedTerms,
                onCheckedChange = { acceptedTerms = it }
            )
            Text("I accept the payout terms and conditions")
        }
        
        Row(verticalAlignment = Alignment.CenterVertically) {
            Checkbox(
                checked = acceptedPrivacy,
                onCheckedChange = { acceptedPrivacy = it }
            )
            Text("I consent to data processing for payouts")
        }
        
        // Action buttons
        Row(
            modifier = Modifier.fillMaxWidth(),
            horizontalArrangement = Arrangement.spacedBy(8.dp)
        ) {
            Button(
                onClick = onDecline,
                modifier = Modifier.weight(1f)
            ) {
                Text("Decline")
            }
            
            Button(
                onClick = {
                    if (acceptedTerms && acceptedPrivacy) {
                        recordConsent()
                        onAccept()
                    }
                },
                enabled = acceptedTerms && acceptedPrivacy,
                modifier = Modifier.weight(1f)
            ) {
                Text("Accept")
            }
        }
    }
}

fun recordConsent() {
    val consent = ConsentRecord(
        customerId = getCurrentCustomerId(),
        consentType = "PAYOUT_TERMS",
        version = "1.0",
        acceptedAt = System.currentTimeMillis(),
        ipAddress = getClientIpAddress(),
        userAgent = getUserAgent()
    )
    
    consentRepository.save(consent)
}

Regional requirements

Country-specific regulations

Implement country-specific compliance:

fun getCountrySpecificRequirements(countryCode: String): ComplianceRequirements {
    return when (countryCode) {
        "US" -> ComplianceRequirements(
            requiresSSN = true,
            requiresTaxId = true,
            maxSingleTransaction = 10000.0,
            requiresBankVerification = true
        )
        "GB" -> ComplianceRequirements(
            requiresSortCode = true,
            requiresFCA_Compliance = true,
            maxSingleTransaction = 8000.0
        )
        "DE" -> ComplianceRequirements(
            requiresGDPR_Compliance = true,
            requiresBaFin_Compliance = true,
            maxSingleTransaction = 15000.0
        )
        else -> ComplianceRequirements.default()
    }
}

Compliance checklist

Before launching payouts:

KYC verification implemented
AML checks in place
Transaction limits enforced
GDPR compliance implemented (if applicable)
Data encryption enabled
Secure communication (TLS 1.2+)
Certificate pinning implemented
Authentication required for payouts
Transaction logging comprehensive
Audit trail maintained
User consent obtained
Terms of service accepted
Privacy policy accepted
Country-specific requirements met
Legal review completed
Security audit passed
Penetration testing completed

What's next?

Testing: Test compliance requirements.
Data validation: Understand validation rules.
Troubleshooting: Debug compliance issues.