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

To accept payments online in New York, you must comply with several laws and regulations. Here are the requirements you need to follow:

Information Returns

If you are a payment settlement entity, third party settlement organization, electronic payment facilitator or other third party acting on behalf of a payment settlement entity, you are required to file information returns relating to payments made in settlement of payment card and third party network transactions with the New York State Department of Taxation and Finance [1.1].

Authorized and Verified Payment Orders

If you are a bank and your customer issues payment orders to you in their name, you must verify the authenticity of these payment orders using a commercially reasonable security procedure [2.3].

Erroneous Payment Orders

If you accept an erroneous payment order, you must refund the payment to the customer to the extent that you are not entitled to enforce payment. You must also pay interest on the refundable amount calculated from the date you received payment to the date of the refund [2.5].

Refund of Payment and Duty of Customer to Report With Respect to Unauthorized Payment Order

If you accept a payment order that is not authorized by the customer, you must refund any payment received from the customer to the extent that you are not entitled to enforce payment. The customer has a duty to exercise ordinary care to determine that the order was not authorized by them and to notify you of the relevant facts within a reasonable time not exceeding ninety days after the date the customer received notification from you that the order was accepted or that the customer’s account was debited with respect to the order [2.7].

Obligations of Receiving Bank in Execution of Payment Order

If you are a receiving bank executing a payment order, you must issue a payment order complying with the sender’s order and follow the sender’s instructions concerning any intermediary bank or funds-transfer system to be used in carrying out the funds transfer. You must also exercise ordinary care in the selection of the intermediary bank. If you are instructed to execute the sender’s order by transmitting its payment order by a particular means, you may issue your payment order by the means stated or by any means as expeditious as the means stated [3.1].

Rejection of Payment Order

If you receive a payment order that you cannot execute, you must reject it by a notice of rejection transmitted to the sender orally, electronically, or in writing. A notice of rejection need not use any particular words and is sufficient if it indicates that the receiving bank is rejecting the order or will not execute or pay the order. Rejection is effective when the notice is given if transmission is by a means that is reasonable in the circumstances. If notice of rejection is given by a means that is not reasonable, rejection is effective when the notice is received [2.1].

Unenforceability of Certain Verified Payment Orders

If you accept a payment order that is not authorized by the customer but is effective as an order of the customer pursuant to subsection (2) of Section 4-A-202, you are 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 [2.2].

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. 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 [2.4].

Acceptance of Payment Order

A receiving bank other than the beneficiary’s bank accepts a payment order when it executes the order. A beneficiary’s bank accepts a payment order at the earliest of the following times: when the bank pays the beneficiary, notifies the beneficiary of receipt of the order or that the account of the beneficiary has been credited with respect to the order unless the notice indicates that the bank is rejecting the order or that funds with respect to the order may not be withdrawn or used until receipt of payment from the sender of the order, or when the bank receives payment of the entire amount of the sender’s order. Acceptance of a payment order cannot occur before the order is received by the receiving bank [2.6].

Erroneous Execution of Payment Order

If you execute a payment order by issuing a payment order in an amount greater than the amount of the sender’s order, or issue a payment order in execution of an unauthorized payment order, you must refund the payment to the customer to the extent that you are not entitled to enforce payment. You must also pay interest on the refundable amount calculated from the date you received payment to the date of the refund [3.2].

It is important to note that these are not the only requirements that you must comply with to accept payments online in New York. Other laws and regulations may also apply depending on the nature of your business and the types of payments you are accepting. It is recommended that you consult with a legal professional to ensure that you are in compliance with all applicable laws and regulations.

Source(s):
Jurisdiction

New York