Technology as the Driver of Payment System Rules: Will Consumers be Provided Seatbelts and Air Bags?
29 Pages Posted: 26 Sep 2008 Last revised: 31 Jan 2014
Date Written: 2008
Technology has led to the development of new payment devices and processing systems, and a complicated body of public and private payments law has been established in response. In this environment, consumers have little control over how their payment instruments will be processed. They are subject to onerous adhesion contracts. It is difficult for consumers to understand the legal consequences of using one payment device over another. In light of these developments, many are questioning how much responsibility the law should impose on consumers when errors occur and how much protection they deserve. Some experts favor legal rules that take maximum advantage of the efficiencies technology can achieve and retention of the present legal rules which vary from one payment device and processing system to another. The better approach, however, is to recognize that consumers have common objectives, regardless of the type of payment device they use or how it is processed. These objectives can be achieved through uniform laws that apply to all types of payment instruments and systems. Those laws should guarantee the right to an error resolution procedure, adjudication of disputes before a judicial forum, and a sixty day deadline for reporting erroneous payments.
Keywords: payment systems, EFTA, electronic funds transfer, payments law
JEL Classification: K20, K29
Suggested Citation: Suggested Citation