(St. Paul, MN) – A bill to increase security and consumer protections in electronic money transfer payment services was passed in the Senate today. The legislation is chief authored by Senator Mark Koran (R-North Branch) and impacts PayPal, Western Union, and similar financial services where electronic payment systems have evolved outside of traditional banking or merchant processing payment networks. The impetus behind the bill was to recognize these emerging payment systems, which have evolved from a simple transfer of funds as a transaction to payments for goods and services.

Under current law, money transfer services were required to transfer all funds with 5 days. This process did not provide the safety and protection for payment transmitters or consumers. This bill adds protection to the money transmitters and consumer protections similar to those in the existing credit card networks (i.e chargebacks and dispute resolution).

“This bill modernizes Minnesota’s electronic fund transfers. It’s a much-needed adjustment, as commerce is evolving quickly in our internet age,” said Senator Koran. “We needed a solution to allow more flexibility, accountability, and security for consumers, businesses and money transfer services. I think this bill meets that need.”

SF 3800 contains three changes to current law. First, by allowing these companies to hold money for more than five days, there is more opportunity to protect Minnesotans from fraud, theft by swindle, and money-laundering attempts. According to its many supporters in the industry, this necessary watchfulness is difficult to achieve in only five days.

Secondly, it brings Minnesota into concordance with many other states with similar laws. This feature will create more uniformity across the industry. Thirdly, money transmitters must respond to inquiries about why funds were held and give refunds within ten days of a request. This benefits the consumer, as there will be higher accountability for all money transmitters. Individuals can rest assured that their funds are safe and that products or services are delivered. This security will be present not only in today’s electronic payment environment but in those which will continue to emerge or evolve, as well.

The bill passed unanimously.