2 PAYMENT METHOD PROFILES: PAY BY BANK
Settlement Time Settlement times have improved markedly in recent years, reflecting the push toward faster payments. 80% of U.S. ACH transactions are now settled on the same day. Previously, the most common window was 1-3 business days in batch settlements. 451 In Europe, SEPA Direct debits traditionally take 2-3 business days to settle. 452 For merchants in India taking QR-code transactions and POS transactions, settlement time is typically the next day after the transaction. 453 Authorization Authorization processes remain central to transaction security and compliance. The originator (ODFI account holder) for the transaction fills out authorization forms to provide standing permissions for entities to pull debits or push credits to the receiver’s account (RDFI account holder). 454 In the U.S., these agreements serve as legal documentation of customer consent. Authorization in Europe is executed via a mandate. This document provides billers and merchants with all the prerequisite documentation to execute transactions and can be provided by the customer digitally in a similar fashion to a terms and conditions document. 455 Fraud/Authentication Process Error resolution policies also differ across regions, particularly in how disputes with merchants are adjudicated. In the U.S., there are three accepted reasons for a dispute for a transaction with a merchant; 1) transaction was not authorized, 2) transaction was processed earlier than authorized, 3) transaction is for different amount than authorized. The Electronic Fund Transfer Act in the U.S. greatly limits consumer liability for unauthorized electronic transactions. 456 Merchants and issuers share liability with responsibility depending on fraudulent activity type. 457 458
Cross-Border/FX Capability Cross-border transfers require gateway operators/payment service providers to classify payments that are transmitted to or received from financial agencies outside of domestic geography in cases outside of SEPA due to Europe being inherently international. 459 460
Refunds Refund mechanisms vary widely by geography, with different levels of consumer protection and processing frameworks. In the U.S., the Receiving Depository Financial Institution (RDFI) is responsible for initiating the refund process. This may occur because account names do not match or that the Originating Depository Financial Institution (ODFI) does not have sufficient funds to carry out the transaction. Partial returns are not permitted. Consumers may also initiate returns if they make the RDFI aware that permissions were not given for this transaction. 461 462 In Europe, SEPA Direct Debits offer consumers refunds for up to 8 weeks, no questions asked. 463 Consumers reach out to their bank directly. In India, UPI customers can raise a complaint on any transactions that initially goes to the payment service provider’s bank. 464 Moreover, there is a clear escalation protocol between stakeholders. 465
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