Confusion and Convergence in Consumer Payments: Is Coherence in Error Resolution Appropriate?

At present, there are no uniform rules governing retail payment systems in the United States. Checks, credit cards, debit cards, and new types of payment systems—such as stored-value cards and prepaid cards—are governed by different rules and provide consumers with varying protections. In addition, several phenomena may have confused consumers about the type of consumer protections they have when using different payment systems. First, new types of intermediaries have developed—such as online funds transmission and electronic bill presentment and payment—that piggyback on existing payment systems. Second, electronic check conversion systems may convert customer checks into a different payment system—electronic funds transfers. Third, new types of payment methods—such as stored-value cards—are not subject to regulation in many instances. This article explores whether there is a benefit to uniform rules for different payment methods, the possibility of harmonization of error resolution procedures, and why harmonization may be an efficient and effective way to prevent and detect error. This article also advocates that, in the absence of uniform Federal procedures, individual states should apply prudential regulations to prepaid cards and stored-value cards as a means of ensuring a minimal level of safety and soundness in consumer transactions