Earlier this month, the Consumer Financial Protection Bureau (or CFPB) issued its 9 “Guiding Principles” for faster payments, and payment protection. As they bureau states, they “want to ensure any new payment systems are secure, transparent, accessible, and affordable to consumers. The systems should also have robust protections when it comes to fraud and error resolution.”
As for those nine treatises, principles, or precepts:
1) Consumer Control Over Payments Any new faster payment system is clear about when, how, and under what terms consumers have authorized a payment.
2) Data and Privacy When helpful to consumers, consumers are informed of how their data are being transferred through any new payment system, including what data are being transferred, who has access to them, how that data can be used, and potential risks.
3) Fraud and Error Resolution Protections Faster payments are accompanied by robust consumer protections with respect to mistaken, fraudulent, unauthorized, or otherwise erroneous transactions. System architecture ensures that information is created and recorded to facilitate post transaction evaluation.
4) Transparency Faster payments include real-time access to information about the status of transactions, including confirmations of payment and receipt of funds.
5) Cost To ensure access and ubiquity, systems are affordable to consumers. Fees charged to consumers are disclosed in a manner that allows consumers to compare the costs of using different available payment options.
6) Access Any new faster system is broadly accessible to consumers. To ensure access and usability, systems are widely accepted by businesses and other consumers.
7) Funds Availability Faster payments bring with them faster guaranteed access to funds, which decreases consumer risk of overdraft and declined transactions due to insufficient funds.
8) Security and Payment Credential Value Systems have strong built-in protections to detect and limit errors, unauthorized transactions, and fraud. These protections safeguard against and respond to data breaches. System architecture and rules enable gateway institutions to offer consumers enhanced security protections.
9) Strong Accountability Mechanisms that Effectively Curtail System Misuse The goals and incentives of system operators, participants, and end users align against misuse. Commercial participants are accountable for the risks, harm, and costs they introduce to payment systems and are incentivized to prevent and correct fraudulent, unauthorized, or otherwise erroneous transactions for consumers.
The CFPB also mentioned it had supported the efforts of NACHA — the National Automated Clearinghouse Association — to introduce “same day ACH” on check payments (which we reported on earlier), and in general, that it “will continue to work with other regulators, entities that are developing the new systems, and other stakeholders to ensure that new payment systems address consumer needs and interests.”
On the other hand, the Banking Exchange website notes that many of the changes and protections proposed by the CFPB may still be a little ways off: “Currently, entities such as the Federal Reserve, NACHA, the Clearinghouse, and SWIFT are working on developing real-time or same-day payment systems that could be instituted in the U.S. The latest indications are that it will be several years before a practical system may be put in place.”
On the other hand, the transparency and protection are needed even sooner. Regardless of CFPB’s timetable, we’ve been working steadily on those same things here at AVPS. Give us a call to look into further securing, speeding up, modernizing, or expanding your own payment systems. We were “robust” long before it was fashionable!
