OCC Opinions and Letters on Permissible Electronic Banking Activities: Electronic Payments

OCC publishes letters associated with charter approvals and other licensing activities, including interpretive letters. Some of these letters provide interpretations of existing laws and regulations. This section includes significant approval letters and interpretations associated with Internet banking activities. The following is a listing of topics in this section that also serve as quick links to the referenced materials:

Electronic Bill Presentment
Stored Value
Merchant processing of credit cards via Internet
Electronic Data Interchange (EDI) Services
Electronic Collection System on Behalf of Public Authority
Dispensing Prepaid Alternate Media from ATMs
Business to Business Electronic Payments Systems

Electronic Bill Presentment

Description	Opinions & Letters
Spectrum, Conditional Approval No. 332 (October 18, 1999). A subsidiary of a national bank may operate an electronic interbank switch to support electronic bill presentment services over the Internet.	Conditional Approval No. 332 (PDF)
Transpoint, Conditional Approval No. 304 (March 5, 1999). A national bank may have a minority investment in limited liability companies that will offer electronic bill payment and presentment services through the Internet. The OCC found that electronic bill presentment is part of the business of banking. OCC has long held that billing and collecting services are permissible for national banks, whether done conventionally or electronically. The OCC has also recognized that as part of an electronic collection or payments process, national banks may store and transmit information related to the underlying transactions, such as electronic data interchange.	Conditional Approval No. 304 (PDF)

Description

Opinions & Letters

Spectrum, Conditional Approval No. 332 (October 18, 1999). A subsidiary of a national bank may operate an electronic interbank switch to support electronic bill presentment services over the Internet.

Conditional Approval
No. 332 (PDF)

Transpoint, Conditional Approval No. 304 (March 5, 1999). A national bank may have a minority investment in limited liability companies that will offer electronic bill payment and presentment services through the Internet. The OCC found that electronic bill presentment is part of the business of banking. OCC has long held that billing and collecting services are permissible for national banks, whether done conventionally or electronically. The OCC has also recognized that as part of an electronic collection or payments process, national banks may store and transmit information related to the underlying transactions, such as electronic data interchange.

Conditional Approval
No. 304 (PDF)

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Stored Value

Description	Opinions & Letters
Mondex, Conditional Approval No. 220 (December 2, 1996). OCC permitted several national banks to acquire membership interests in two LLCs that will operate an "open" stored value card system. The creation, sale and redemption of electronic stored value in exchange for dollars is part of the business of banking because electronic equivalent of issuing circulating notes or other paper based payment devices like travelers checks.	Conditional Approval No. 220 (PDF)
Huntington, Interpretive Letter No. 737 (August 19, 1996). A national bank may invest in LLC that will design, install and support closed SVC systems at universities and other institutions. Letter did not address the issuance of stored value (done by entity other than the LLC). LLC activities are basically two: 1) support services for closed SVC systems and 2) set-up those systems to support non-banking smart card functions (e.g., library records and building access control). The second is incidental to stored value function because "necessary for customer use" and because "necessary for successful marketing" of a SV system based upon smart card technology.	Interpretive Letter No. 737 (PDF)

Description

Opinions & Letters

Mondex, Conditional Approval No. 220 (December 2, 1996). OCC permitted several national banks to acquire membership interests in two LLCs that will operate an "open" stored value card system. The creation, sale and redemption of electronic stored value in exchange for dollars is part of the business of banking because electronic equivalent of issuing circulating notes or other paper based payment devices like travelers checks.

Conditional Approval
No. 220 (PDF)

Huntington, Interpretive Letter No. 737 (August 19, 1996). A national bank may invest in LLC that will design, install and support closed SVC systems at universities and other institutions. Letter did not address the issuance of stored value (done by entity other than the LLC). LLC activities are basically two: 1) support services for closed SVC systems and 2) set-up those systems to support non-banking smart card functions (e.g., library records and building access control). The second is incidental to stored value function because "necessary for customer use" and because "necessary for successful marketing" of a SV system based upon smart card technology.

Interpretive Letter
No. 737 (PDF)

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Merchant processing of credit cards via Internet

Description	Opinions & Letters
FNB Omaha, Corporate Decision No. 99-35 (October 20, 1999). A national bank may provide, via Internet links, its merchant-processing customers with information and access to third party vendors of services for the merchant processing industry.	Corporate Decision No. 99-35 (PDF)
Letter from June H. Allen. Senior Attorney (June 27, 1996) (unpublished). A national bank may permit its merchant customers to transmit their sales information over the Internet rather than physically submitting paper sales drafts or electronically transmitting their sales information by a dial terminal.	Letter Unpublished

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Electronic Data Interchange (EDI) Services

Description	Opinions & Letters
Interpretive Letter No. 732 (May 10, 1996). A national bank may acquire and hold a minority interest in a company that offers EDI services that allow businesses to send and receive payments, invoices and orders worldwide. The EDI services are "part of or incidental to business of banking."	Interpretive Letter No. 732 (PDF)

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Electronic Collection System on Behalf of Public Authority

Description	Opinions & Letters
Anexsys, Conditional Approval No. 361 (March 3, 2000). A national bank may provide an electronic service to state governments that enables the governments to process motor vehicle title applications and related payments over the Internet.	Conditional Approval No. 361 (PDF)
Interpretive Letter No. 731 (July 1, 1996) (E-Z Pass System Letter). A national bank may enter a contract with a public authority to operate, on behalf of the public authority, an electronic toll collection system because the activities involved are part of the business of banking (the collection and remittance of funds and payments) and thus permissible under 12 U.S.C. § 24(Seventh).	Interpretive Letter No. 731 (PDF)

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Dispensing Prepaid Alternate Media from ATMs

Description	Opinions & Letters
Interpretive Letter No. 718 (March 14, 1996). A national bank may dispense "alternate media" supplied by merchants—i.e., public transportation tickets, event and attraction tickets, gift certificates, prepaid phone cards, promotional and advertising materials, EBT script, and credit and debit cards—from ATM machines. The letter emphasizes that the alternate media are only evidence of value; the transaction is not consummated until the cardholder uses the media to obtain the merchant's goods or services. Thus, the bank is not selling the merchants' goods or services, an activity prohibited by 12 U.S.C. § 24(Seventh).	Interpretive Letter Not Available On-line

Description

Opinions & Letters

Interpretive Letter No. 718 (March 14, 1996). A national bank may dispense "alternate media" supplied by merchants—i.e., public transportation tickets, event and attraction tickets, gift certificates, prepaid phone cards, promotional and advertising materials, EBT script, and credit and debit cards—from ATM machines. The letter emphasizes that the alternate media are only evidence of value; the transaction is not consummated until the cardholder uses the media to obtain the merchant's goods or services. Thus, the bank is not selling the merchants' goods or services, an activity prohibited by 12 U.S.C. § 24(Seventh).

Interpretive Letter
Not Available On-line

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Business to Business Electronic Payments Systems

Description	Opinions & Letters
Identrus II, Corporate Decision No. 2002-4 (February 18, 2002). A national bank acting as a digital certificate authority may with other financial institutions provide support for electronic payment initiation products and services to commercial buyers and sellers by 1) using the banks' digital certificates to verify payment initiation messages and 2) by developing and maintaining the operating rules for the electronic payments system.	Corporate Decision No. 2002-4 (PDF)

Description

Opinions & Letters

Identrus II, Corporate Decision No. 2002-4 (February 18, 2002). A national bank acting as a digital certificate authority may with other financial institutions provide support for electronic payment initiation products and services to commercial buyers and sellers by 1) using the banks' digital certificates to verify payment initiation messages and 2) by developing and maintaining the operating rules for the electronic payments system.

Corporate Decision
No. 2002-4 (PDF)

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