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Can I use third-party payment processors on my website in Colorado? What are the requirements?
Third-Party Payment Processors in Colorado
Colorado law does not prohibit the use of third-party payment processors on websites. However, there are certain requirements that must be met.
According to CORS 24-19.5-103, a state governmental entity may impose a convenience fee on persons who use alternative forms of payment, but the amount of any convenience fee imposed on or after April 29, 2003, shall not exceed the actual additional cost incurred by the state governmental agency to process the transaction by alternative form of payment. Any convenience fee on a transaction involving an alternative form of payment shall be imposed in accordance with the master agreement negotiated by the state treasurer and the rules of the alternative payment provider. This means that if you are a state governmental entity, you must negotiate a master agreement with the payment processor and follow their rules when imposing convenience fees.
Additionally, CORS 4-4.5-203 states that a receiving bank may limit the extent to which it is entitled to enforce or retain payment of a payment order by express written agreement. This means that if you are a receiving bank, you may limit your liability by entering into an agreement with the payment processor.
There are no specific requirements for non-governmental entities using third-party payment processors in Colorado. However, it is recommended that you review the terms and conditions of the payment processor and ensure that they comply with applicable laws and regulations.
Regarding the authorization and verification of payment orders, CORS 4-4.5-202 states that 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.
In summary, Colorado law does not prohibit the use of third-party payment processors on websites. State governmental entities must negotiate a master agreement with the payment processor and follow their rules when imposing convenience fees. Receiving banks may limit their liability by entering into an agreement with the payment processor. Non-governmental entities should review the terms and conditions of the payment processor and ensure compliance with applicable laws and regulations. Payment orders received by the receiving bank are authorized if the sender 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. [2.1]
Source(s):
Jurisdiction
Colorado