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Can I accept payments online without violating payment processing laws in Missouri? What are the requirements?

To accept payments online in Missouri, you must comply with the Missouri Uniform Commercial Code (UCC) Article 4A, which governs funds transfers. Under MORS 400.4A-201, a funds transfer is defined as “the series of transactions, beginning with the originator’s payment order, made for the purpose of making payment to the beneficiary of the order.”

To comply with the UCC Article 4A, you must ensure that your payment processing system meets the following requirements:

Security Procedures

You must have security procedures in place to detect and prevent unauthorized access to payment orders and to detect errors in the transmission of payment orders. These procedures must be commercially reasonable and agreed upon by both the sender and the receiving bank [1.4]. Commercial reasonableness of a security procedure is a question of law to be determined by considering the wishes of the customer expressed to the bank, the circumstances of the customer known to the bank, including the size, type, and frequency of payment orders normally issued by the customer to the bank, alternative security procedures offered to the customer, and security procedures in general use by customers and receiving banks similarly situated [1.3].

Authorized and Verified Payment Orders

If a bank and its customer have agreed that the authenticity of payment orders issued to the bank in the name of the customer as sender will be verified pursuant to a security procedure, a payment order received by the receiving bank is effective as the order of the customer, whether or not authorized, if (i) the security procedure is a commercially reasonable method of providing security against unauthorized payment orders, and (ii) the bank proves that it accepted the payment order in good faith and in compliance with the security procedure and any written agreement or instruction of the customer restricting acceptance of payment orders issued in the name of the customer [1.3].

Unenforceability of Certain Verified Payment Orders

If an accepted payment order is not, under section 400.4A-202(a), an authorized order of a customer identified as sender, but is effective as an order of the customer pursuant to section 400.4A-202(b), the receiving bank may limit the extent to which it is entitled to enforce or retain payment of the payment order by express written agreement. The receiving bank is not entitled to enforce or retain payment of the payment order if the customer proves that the order was not caused, directly or indirectly, by a person entrusted at any time with duties to act for the customer with respect to payment orders or the security procedure, or who obtained access to transmitting facilities of the customer or who obtained, from a source controlled by the customer and without authority of the receiving bank, information facilitating breach of the security procedure, regardless of how the information was obtained or whether the customer was at fault [1.2].

Cancellation and Amendment of Payment Order

A communication of the sender of a payment order cancelling or amending the order may be transmitted to the receiving bank orally, electronically, or in writing. If a security procedure is in effect between the sender and the receiving bank, the communication is not effective to cancel or amend the order unless the communication is verified pursuant to the security procedure or the bank agrees to the cancellation or amendment. Subject to the previous sentence, a communication by the sender cancelling or amending a payment order is effective to cancel or amend the order if notice of the communication is received at a time and in a manner affording the receiving bank a reasonable opportunity to act on the communication before the bank accepts the payment order. After a payment order has been accepted, cancellation or amendment of the order is not effective unless the receiving bank agrees or a funds-transfer system rule allows cancellation or amendment without agreement of the bank [1.5].

In summary, to accept payments online in Missouri, you must have security procedures in place to detect and prevent unauthorized access to payment orders and to detect errors in the transmission of payment orders. You must also ensure that your payment processing system complies with the Missouri Uniform Commercial Code, which prohibits additional charges or fees and establishes liability for late or improper execution or failure to execute payment orders. If you and your bank have agreed to verify payment orders pursuant to a security procedure, the payment order received by the receiving bank is effective as the order of the customer, whether or not authorized, if the security procedure is a commercially reasonable method of providing security against unauthorized payment orders, and the bank proves that it accepted the payment order in good faith and in compliance with the security procedure and any written agreement or instruction of the customer restricting acceptance of payment orders issued in the name of the customer. If an accepted payment order is not an authorized order of a customer identified as sender, but is effective as an order of the customer pursuant to section 400.4A-202(b), the receiving bank may limit the extent to which it is entitled to enforce or retain payment of the payment order by express written agreement. Finally, a communication by the sender cancelling or amending a payment order is effective to cancel or amend the order if notice of the communication is received at a time and in a manner affording the receiving bank a reasonable opportunity to act on the communication before the bank accepts the payment order.

Source(s):
Jurisdiction

Missouri