With the introduction of a variety of new, faster payment methods, including Same Day ACH, The Clearing House’s Real-Time Payment System (RTP) and Early Warning Services’ Zelle payment service, as well as a potential Federal Reserve Real Time Gross Settlement (RTGS) offering, the payments landscape is evolving rapidly.
These systems and services are subject to an extensive set of legal requirements. Those aiming to understand this legal framework must look to not only laws and regulations, but also payment system rules. Core laws include the Electronic Fund Transfer Act and its implementing regulation, Regulation E, and Article 4A of the Uniform Commercial Code (Article 4A). In many cases, the applicability and operation of these requirements, a financial institution’s obligations, and a customer’s rights, are dependent on the nature and features of a particular payment transaction. This includes, for example, whether the transaction is a consumer or commercial transaction; whether funds are moved via a “debit pull” payment or a “credit push payment”; and whether the transaction is reversible or final. In many cases, these distinctions and their significance is not well understood. However, to make sense of the legal requirements for new, faster payments systems, it is essential to understand core payment concepts and how the functionality of these systems differ.