Consumer Transactions Data, Data Privacy, MNPI, PII

What is Consumer Transactions Data?

Consumer transactions data is financial data collected from a point-of-sale (POS) transaction. A POS transaction is the moment where a transaction is finalized or the moment where a consumer tenders payment in exchange for goods and services. This includes payment forms like cash, credit cards, debit cards, mobile payments, and loyalty points. This data is cited as the most popular alternative data sources for hedge funds.

Use Case for Hedge Funds

Credit and debit card transactions data is used by hedge funds to understand industry trends and more detailed insights for restaurants, retailers, e-commerce brands, and investors. The transactions data purchased by hedge funds from companies like Yodlee is anonymized and aggregated but provides information on where customers dine, where they shop for clothing and which retailers are frequently visited. All of this translates into consumer spending and brand preferences.

How Transactions Data is Captured

Point-of-sale software is connected to the cash register or installed in a computer or tablet (in place of cash register). Transaction data may also be collected via a Personal Financial Manager (PFM) tool which is a bank app or any financial app that aggregates, categorizes and tracks spending from all accounts that a consumer holds at any institution. The POS software and PFM tool records all details of the consumer’s transactions like:

  • customer details – name, address, contact information, payment method, bank account summaries, and may even contain name of sales associate
  • payment method – cash, credit card, debit card, PayPal, loyalty points, gift card or other payment method
  • inventory details – details on product purchased, price, quantity, brand
  • tax details – tax obligations of the transaction

Sample Fields Offered to Hedge Funds

  • hashed or unique card account ID
  • hashed or unique user/member ID
  • item account ID
  • card transaction ID
  • amount
  • transaction date
  • post date
  • transaction status
  • transaction category
  • memo
  • description field
  • biller network ID
  • currency ID
  • converted amount
  • public company brand ticker

Compliance Checklist

  • CCPA and GDPR regulatory requirements – are they met?
  • PII risk from any of the fields – do they exist?
  • Open text fields – could they contain PII or sensitive information?
  • Is the data cleansing process and Info Security framework robust?
  • Does the vendor have the right to obtain the consumer data and redistribute for use in the financial services industry?
  • Has any duty or obligation in the data chain been breached?
  • Have you reviewed the underlying agreements where the vendor came into possession of the data?
    • What do those representations look like?
    • How does the seller know that the source had the ability to transmit the data to the seller?
  • Will you be using the data as provided for in the contract with the data vendor?
  • Does your agreement have warranties and reps around MNPI?
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