Regulations for Payment Processing

Like anything finance-related, payment processing is a heavily regulated industry in the United States. This is to not only protect consumers, but also merchants, banks, and intermediaries like payment processing companies and fintech software providers. There are a number of ways these regulations are used to accomplish this, and merchants looking for a payment processor often have no idea what regulations or regulatory bodies are involved in the industry, and this can leave them unsure as to how they can do their due diligence and ensure compliance.

In this guide, we will go over the regulations for payment processing and the organizations that develop and enforce them. Then, we will explain what merchants can do to ensure that they aren’t at risk of non-compliance.

Regulations for Payment Processing

Regulation	Description
Truth in Lending Act (TILA)	Requires lenders and financial institutions to transparently disclose costs, use standardized language to ensure readability of lending docs, abide by certain lending practice standards, limit certain fee types, and allow borrowers to cancel without penalties in some cases.
Equal Credit Opportunity Act (ECOA)	Forbids lenders from discriminating based on protected characteristics like age, race, nationality, religion, sex, marital status, or participation in public assistance programs.
Electronic Fund Transfer Act (EFTA)	Establishes rights and guidelines for consumers and financial institutions involved in electronic fund transfers (EFTs).
Bank Secrecy Act (BSA)	Requires financial institutions to keep certain financial records, report transactions of over $10,000 and other suspicious activity, and assist the US government in identifying and investigating money laundering.
Anti-Money Laundering Act (AMLA)	Expanded the scope of existing anti-money laundering regulations, strengthening penalties and improving information sharing to improve the ease and severity of money laundering prosecution.
Non-Legal Regulations
Payment Card Industry Data Security Standard (PCI-DSS)	A set of security standards developed by the five major credit card companies (Visa, Mastercard, Discover, JCB, and American Express) to optimize the security of credit and debit card transactions.
Card Network Regulations	The requirements each individual card company hold for payments processed using their cards or accounts.

The following regulations set the framework for payment processing in the United States by protecting consumers, combating fraud, safeguarding data, and ensuring that payment processing practices don’t cause market instability or facilitate illegal activity.

Core Regulations for Payment Processing

Regulatory Bodies for Payment Processors

While these regulations are important to note, it is equally vital to understand the bodies that enforce them and how they interact with processors, merchants, and consumers. The following are the key regulatory bodies that oversee payment processing and other finance regulations:

Consumer Financial Protection Bureau (CFPB): The federal agency designed to improve, oversee, and enforce consumer protection in finance and lending. They are the primary enforcement arm of regulations like the TILA, ECOA, and EFTA.
Federal Trade Commission (FTC): A federal agency that focuses on promoting fair competition in trade, including some consumer protections that cross over into the payment processing industry.
Office of the Comptroller of the Currency (OCC): A part of the US Department of the Treasury that regulates national banks and other financial institutions and ensures they abide by federal banking law.
Financial Crimes Enforcement Network (FinCEN): Another bureau of the US Department of the Treasury, and the primary regulator for anti-money laundering regulations like the BSA and AMLA.
Department of Justice (DOJ): The overarching enforcement body of federal laws, and the body that typically performs investigations and serves as the prosecutor in cases regarding federal regulations for payment processing.
Federal Reserve: The Federal Reserve is technically an independent organization, separate from the US government, but it plays a core role in architecting financial regulations and conducting research to better inform future policy.
National Automated Clearing House Association (NACHA): Another org that is technically not a government agency, NACHA manages and governs the ACH payment system in the United States.

These regulatory bodies are all vital in the crafting, oversight, and enforcement of finance regulations. While others are also involved, like the FDIC and the NCUA, these organizations work more exclusively with financial institutions as opposed to payment processors.

How to Comply With Regulations for Payment Processing

The best way to ensure compliance with payment processing regulations is to seek out processors with a strong track record of compliance, high data security standards (like PCI-DSS compliance), transparent operations, and dedicated account managers to facilitate better communication between the processor and the merchant.

This is where SeamlessChex comes in.

Partner With a Reputable Processor Like Seamless Chex

Seamless Chex is an experienced high-risk payment processor that specializes in purpose-driven features like chargeback management tools and fraud protection. Our 99.1% approval rate and comprehensive high-risk industry list mean businesses of nearly all industries and sizes can be confident in our support. We work to truly understand your business from the outset, with upfront underwriting and individualized payment schedules designed to work for each client’s market and business cycle.

‍To learn more about regulations for payment processing, contact us today.

Regulations for Payment Processing

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