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Can I accept payments online without violating payment processing laws in Massachusetts? What are the requirements?

To accept payments online without violating payment processing laws in Massachusetts, you must comply with the requirements outlined in the Uniform Commercial Code (UCC) Article 4A [1.8].

According to Section 4A-202 of the UCC Article 4A, a payment order received by the receiving bank is the authorized order of the person identified as the sender if such 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 a payment order 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 an unauthorized payment order, 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 such customer restricting acceptance of a payment order issued in the name of such customer [1.2].

Additionally, Section 4A-205 of the UCC Article 4A outlines the rules that apply if an accepted payment order was transmitted pursuant to a security procedure for the detection of error and the payment order erroneously instructed payment to a beneficiary not intended by the sender, erroneously instructed payment in an amount greater than the amount intended by the sender, or was an erroneously transmitted duplicate of a payment order previously sent by the sender [1.4].

Furthermore, Section 4A-302 of the UCC Article 4A outlines the obligations of the receiving bank in executing a payment order, including issuing a payment order complying with the sender’s order and following the sender’s instruction concerning any intermediary bank or funds transfer system to be used in carrying out the funds transfer [1.6].

It is important to note that in addition to complying with the UCC Article 4A, you should also ensure that you comply with other applicable laws and regulations, such as data protection laws and anti-money laundering laws.

Please note that this response is not exhaustive and is provided for informational purposes only. It is recommended that you consult with a legal professional to ensure that you are in compliance with all applicable laws and regulations.

[1.2]: MGL Chapter 106, Article 4A, Section 4A-202 [1.4]: MGL Chapter 106, Article 4A, Section 4A-205 [1.6]: MGL Chapter 106, Article 4A, Section 4A-302 [1.8]: MGL Chapter 106, Article 4A, Section 4A-209

Source(s):
Jurisdiction

Massachusetts