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

To accept payments online in Pennsylvania, you must comply with the state’s payment processing laws. Here are some requirements you should consider:

Authorized and Verified Payment Orders

Under 13 PACS 4A202, a payment order received by the receiving bank is the authorized order of the person identified as sender if that person authorized the order or is otherwise bound by it under the law of agency. 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 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. It is important to note that 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. A security procedure is deemed to be commercially reasonable if the security procedure was chosen by the customer after the bank offered, and the customer refused, a security procedure that was commercially reasonable for that customer and the customer expressly agreed in writing to be bound by any payment order, whether or not authorized, issued in its name and accepted by the bank in compliance with the security procedure chosen by the customer.

Unenforceability of Certain Verified Payment Orders

Under 13 PACS 4A203, if an accepted payment order is not, under section 4A202(a) (relating to authorized and verified payment orders), an authorized order of a customer identified as sender, but is effective as an order of the customer pursuant to section 4A202(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.

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

Under 13 PACS 4A204, if a receiving bank accepts a payment order issued in the name of its customer as sender which is not authorized and not effective as the order of the customer under section 4A202 or not enforceable, in whole or in part, against the customer under section 4A203, the bank shall refund any payment of the payment order received from the customer to the extent the bank is not entitled to enforce payment and shall pay interest on the refundable amount calculated from the date the bank received payment to the date of the refund. However, the customer is not entitled to interest from the bank on the amount to be refunded if the customer fails to exercise ordinary care to determine that the order was not authorized by the customer and to notify the bank of the relevant facts within a reasonable time, not exceeding 90 days, after the date the customer received notification from the bank that the order was accepted or that the customer’s account was debited with respect to the order.

Erroneous Payment Orders

Under 13 PACS 4A205, if an accepted payment order was transmitted pursuant to a security procedure for the detection of error and the payment order erroneously instructed payment to a beneficiary not intended by the sender, erroneously instructed payment in an amount greater than the amount intended by the sender, or was an erroneously transmitted duplicate of a payment order previously sent by the sender, the sender is not obliged to pay the order to the extent stated in subparagraphs (ii) and (iii) if the sender proves that the sender or a person acting on behalf of the sender pursuant to section 4A206 complied with the security procedure and that the error would have been detected if the receiving bank had also complied. If the funds transfer is completed on the basis of an erroneous payment order described in paragraph (1)(i) or (iii), the sender is not obliged to pay the order and the receiving bank is entitled to recover from the beneficiary any amount paid to the beneficiary to the extent allowed by the law governing mistake and restitution. If the funds transfer is completed on the basis of a payment order described in paragraph (1)(ii), the sender is not obliged to pay the order to the extent the amount received by the beneficiary is greater than the amount intended by the sender. In that case, the receiving bank is entitled to recover from the beneficiary the excess amount received to the extent allowed by the law governing mistake and restitution.

It is important to note that these are just some of the requirements you should consider when accepting payments online in Pennsylvania. Other laws and regulations may also apply. It is recommended that you consult with a legal professional to ensure compliance with all applicable laws and regulations.

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Source(s):
Jurisdiction

Pennsylvania