The transition from being a wholly land-based business to a digital one may seem straightforward, and for the most part, it is. Creating a website to sell goods and services or to connect to other businesses is relatively easy these days. It’s also likely far easier than finding and acquiring a suitable location for a physical business. Still, the switch from the physical plane to the digital one does come with several other important new elements to consider.
Chief among these is licensing. In industries and countries where your business operates on a license, you’re bound to have additional considerations for that license – or even a different one – when you move online. The internet is a wide and open space rife with opportunities for savvy businesses, but there are still plenty of rules in place. Here are the areas that your business may need to take into consideration before going digital.
Additional Requirements for Digital Businesses
On top of the licensing required for a business to run as a land-based entity, there will likely be additional licensing required to operate digitally. Those requirements will vary greatly from business to business, depending on what activities you plan to run, the style of marketing you wish to engage in, and what media you want to use on your platform. As a blanket look at digitizing a business, though, there are three big considerations.
The first is keeping up with anti-money laundering and, potentially, Know Your Customer rules and regulations. Online businesses that operate in the exchange of funds will have these elements embedded in their digital business license. This is an area to consider if you’re looking to accept cryptocurrencies. As is detailed in the Investopedia guide to anti-money laundering, crypto has gained a lot of attention in this area of late.
It’s a measure of online financial and business security. Much like with land-based operations, online businesses will also need to ensure the security of not only their website and content but also the details and payment information of customers. Many licenses will require a high level of security to be implemented on a platform, such as with a strong SSL certificate. Then, as the ICO explains about data protection procedures for UK-based small businesses, there are also strict data laws to adhere to as an online entity.
How One Industry Wrangles to Switch from Land to Digital
One very license-heavy industry offers the prime demonstration of how businesses have had to adapt from land-based operations to digital ones and take different requirements into consideration. As is explained in the InteliumLaw guide to getting an online gaming license, the very nature of the operating systems brings different factors into consideration for licensors.
At land-based casinos, the rules of the municipality and regulations on the fairness of physical games are the main aspects of licensing. Online, there aren’t these physical restrictions, but there are rules on RNG fairness, data protection, and digital security measures that range from safe payment methods to AML and KYC requirements. To obtain a gaming license, an online casino must tick several boxes and continue to be compliant.
As an example, business operators in this sector must have a good reputation to be considered for a license. From there, the technology and software offered online need to be certified, proven to be fair, and within the standards of the market. On the financial side, an online casino needs to prove the clear source of its funds, abide by AML and KYC policies, enforce cybersecurity safeguards, and continue to be transparent in its reporting.
Due to the different mediums of service, businesses need to acquire different licenses when pivoting from land-based operations to the digital space. So, it’s worth exploring what your business would need to do to remain compliant if you’re sizing up a move.
