Electronic Payment Systems: Law and Emerging Technologies
Pepper attorneys Jay Dubow and Mark Dabertin authored a chapter in the American Bar Association publication Electronic Payment Systems: Law and Emerging Technologies. Below is an excerpt from their chapter - "Charging Ahead—From Innovation to Industry."
Near magical ease of use, such as the tapping of a mobile phone or the waving of a credit card, has become expected in the fiercely competitive payment card industry. Yet the apparent simplicity and fleeting duration of a card transaction—often mere seconds transpire between the card’s presentment and confirmation of payment—belie its true complexity. A consumer’s use of their payment card, whether it is a credit, debit, or pre-paid card, triggers a financial transaction involving a myriad of contractual obligations, operational interdependencies, and regulatory requirements. As will be explored in this chapter, the seamlessness experienced by the consumer in using their card depends on close coordination among multiple parties that is primarily achieved through industry self-regulation.
Describing what happens in a payment card transaction is akin to describing a complex football play that resulted in a touchdown; i.e. the fact of the touchdown is obvious, but many of the play’s most important attributes will be missed by a casual “armchair” fan. Knowing something more about the game, the rules, and the players is necessary for deeper understanding. Hence, following a brief summary of the history of payment cards, this chapter first introduces the key “players” in a card transaction and then discusses their respective roles as the transaction proceeds. Next, the chapter reviews the primary types of payment card products and the legal requirements that govern them. Finally, the chapter concludes with a discussion of newer payment technologies and the extent to which the device used to initiate the transaction, such as a mobile phone versus a plastic card, affects the applicable risks.
Outline of Chapter 2: Charging Ahead—From Innovation to Industry:
- How It Began
- A New Industry Arises in Post-WWII America
- Card Industry Key Players
- Card Associations
- Acquiring Banks
- Card Issuers
- Electronic Payment Systems
- Payment Processing
- Transaction Authorization
- Charge-Backs
- Card Products and Applicable Law
- Types of Card Products
- Key Laws
- New Card Payment Technologies
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The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.