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Can you summarize 3 NYCRR Legal Interpretations, Legal Interpretation 7, Section 7.1?
Miscellaneous--Banking Law > Certain activities with respect to credit cards.
Short Summary
This legal document pertains to a company that wishes to engage in the business of gathering credit card purchase slips from small merchants and presenting them for payment to the issuing bank. The company obtains a more favorable purchase rate by presenting the slips in bulk. The department clarifies that licensing under the Banking Law is only required if the company is in the business of ‘purchasing or otherwise acquiring’ the credit-card obligations. However, if the company acts solely as an agent, providing bookkeeping and bailment services to the merchants, and if it does not acquire title to the obligations, no licensing is required. The department also notes that the company’s payment arrangements with the issuing banks and merchants do not fall under the activities requiring licensing under article XIII of the Banking Law. This document was issued on June 1, 1974.
Whom does it apply to?
The company engaging in the business of gathering credit card purchase slips from small merchants
What does it govern?
Activities with respect to credit cards
What are exemptions?
The company is exempt from licensing requirements if its activity is solely in the nature of providing bookkeeping and bailment services to the merchants as their agent, and if title to the credit-card obligations does not vest in the company at any time.
What are the Penalties?
No specific penalties mentioned.
Jurisdiction
New York