Businesses feel the pain of the General Data Protection Regulation (GDPR). A sobering reminder of the price of non-compliance, GDPR fines in 2023 alone reached over €1.78 billion. Are you having trouble navigating the nuances of GDPR as a software, video game, or SaaS company?
This tutorial will assist you in comprehending the particular GDPR compliance issues you encounter and how a Merchant of Record may simplify data privacy management, lower financial obligations, and guarantee compliance with changing legislation.
It is not an option to ignore GDPR. Non-compliance can harm your reputation, undermine customer trust, and result in heavy fines (up to 4% of annual global turnover or €20 million, whichever is larger).
GDPR (General Data Protection Regulation): An EU regulation governing the processing of personal data of individuals within the EEA. It aims to protect data privacy and security.
Personal Data: Any information relating to an identified or identifiable natural person.
Processing: Any operation or set of operations performed on personal data.
Data Controller: The entity that determines the purposes and means of processing personal data.
Data Processor: The entity that processes personal data on behalf of the controller.
Merchant of Record (MOR): A third-party that takes on the legal and financial responsibilities of selling products or services online, including GDPR compliance. The MOR becomes the data controller for transactional data, helping companies offload many compliance responsibilities.
Data Privacy Impact Assessment (DPIA): A process to identify and minimize the data protection risks of a project or plan.
The GDPR regulates how personal data about persons is processed in the European Economic Area (EEA). It establishes stringent guidelines for the gathering, storing, using, and transferring of data. This creates a complicated web of compliance requirements for software, video game, and SaaS companies, particularly when working with overseas clients.
Any entity, regardless of location, that handles the personal data of EU citizens is subject to the GDPR. This means that even if they are based outside of the EU, SaaS, software, and video game companies that sell to EU customers have to comply. By serving as a barrier between your company and the dangers of EU enforcement, a Merchant of Record can be an essential ally in navigating these requirements.
Because of the nature of their business models, SaaS, software, and video game companies face particular GDPR challenges:
Microtransactions and in-app purchases: These entail managing private payment information.
- Example: Ensuring card information is processed securely when buying mobile games.
Here are three examples of famous GDPR enforcement actions:
Amazon (2021): €746M fine for invalid consent in advertising.
Meta (2023): €1.2B fine for unlawful international data transfers to the US.
H&M (2020): €35M fine for employee data misuse.
A Merchant of Record (MoR) is crucial to making GDPR compliance easier, especially for companies that sell online and conduct business internationally. Here is a breakdown of problems and solutions offered by the MOR:
Complicated GDPR regulations for data transfer and processing
Managing consent appropriately
Addressing requests from data subjects
Complying with data transmission and localization regulations
GDPR-related financial responsibility
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Here is a breakdown of the procedure:
Request intake and confirmation: MOR logs and authenticates requests to delete data.
Coordination of data: Works with the client to remove data from every system.
Confirmation and logging: Keeps records for regulatory audits by notifying the requester and documenting the erasure.
Conducting Data Protection Impact Assessments (DPIAs) for software and SaaS sales is an essential procedure, particularly in light of the growing significance of data privacy laws such as the GDPR. Here is the process:
Steps to take:
If necessary, get advice from regulators.
In order to provide users with local weather alerts, your app tracks their locations.
Risks: privacy invasion and unauthorized tracking.
Mitigations: encrypting messages, anonymizing location data, and requiring user consent.
Consider these best practices when implementing and monitoring GDPR compliance:
Here are some mistakes that SaaS, software, and video game companies make:
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Disclaimer: Please bear in mind that this article should not be treated as legal advice in complying with the GDPR. The sole purpose of this article is to facilitate a better understanding of the approved EU data privacy law.
If you are in need of legal advice on the matter, we urge you to seek the assistance of an attorney, who can apply the GDPR to the specific needs of your company.
Businesses in the software, SaaS, and video gaming sectors face unique GDPR challenges due to their digital nature and global reach. Key risks involve managing user consent effectively across subscriptions and for user tracking/analytics, ensuring lawful international data transfers (often requiring mechanisms like Standard Contractual Clauses or SCCs), complying with potential data localization laws in specific countries, and securely handling sensitive payment information for microtransactions and in-app purchases. Failure to address these areas properly can expose your business to significant compliance violations and penalties, as seen in recent enforcement actions against major tech companies.
A Merchant of Record (MoR) acts as the legal entity responsible for selling your digital products or services online, and in doing so, it significantly simplifies your GDPR compliance burden for those transactions.
The MoR becomes the data controller for the transactional data it processes (like payment details and billing information). This means the MoR assumes key GDPR responsibilities such as obtaining valid consent during purchase, handling data subject requests (like access or deletion) related to transactions, ensuring compliant data transfer mechanisms, and taking on the financial liability for GDPR compliance concerning that sales data. This reduces your direct regulatory risk and administrative workload.
No, using a Merchant of Record primarily shifts the GDPR responsibilities related to the sales transaction process but doesn't eliminate all obligations for your company.
While the MoR is the data controller for the payment and billing data it handles, your company likely remains the data controller for other personal data you collect directly. This could include user account information (beyond payment details), product usage analytics, marketing communication data, or employee data. You must still ensure your own internal data processing activities are GDPR compliant.
A Merchant of Record performs several key tasks to manage GDPR compliance for the sales it processes on your behalf.
This typically includes: implementing compliant checkout flows to capture necessary consents, securely processing and storing payment information, establishing procedures to manage data subject access and deletion requests for transactional data, ensuring legal data transfer mechanisms (like SCCs) are in place if data crosses borders (e.g., outside the EEA), adhering to data localization rules where applicable, and maintaining auditable records of these compliance activities.