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

To accept payments online in South Dakota, you must comply with the South Dakota Codified Laws (SDCL) related to payment processing. Here are the requirements:

Requirements for Accepting Payments Online in South Dakota

  1. Register with the South Dakota Department of Revenue: Any retailer who sells tangible personal property, products transferred electronically, or services for use in South Dakota must register with the South Dakota Department of Revenue and obtain a sales tax license [2.2].
  2. Collect and remit sales tax: Retailers must collect and remit sales tax on all taxable sales made in South Dakota [2.2].
  3. Provide notice on the check-out page: For any internet purchase made in South Dakota, notice on the check-out page fulfills both the website and invoice notice requirements simultaneously. The notice shall be sufficient if the noncollecting retailer provides a prominent linking notice that reads as follows: “See important South Dakota sales and use tax information regarding the tax you may owe directly to the State of South Dakota.” The check-out page notice link shall direct the purchaser to the principal notice required by § 10-63-2 [2.2][2.4].
  4. Comply with payment order rejection rules: Payment orders may be rejected by the receiving bank if the notice of rejection is transmitted to the sender orally, electronically, or in writing. 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 [3.1].
  5. Comply with authorized and verified payment orders: 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 [3.3].

Reports required from out-of-state bank with South Dakota branch

If you are an out-of-state bank with a branch in South Dakota, you may be required to provide periodic reports to the South Dakota Department of Revenue [1.2].

Conclusion

To accept payments online in South Dakota, you must register with the South Dakota Department of Revenue, collect and remit sales tax, provide notice on the check-out page, and comply with payment order rejection and authorized and verified payment orders rules. If you are an out-of-state bank with a branch in South Dakota, you may also be required to provide periodic reports to the South Dakota Department of Revenue.

Source(s):
Jurisdiction

South Dakota