CFPB EFT FAQ Coverage Fin Inst 3 – If a non-bank P2P payment provider initiates a debit card “pass-through” payment from the consumer’s account…is the non-bank P2P payment provider considered a financial institution under Regulation E?

Compliance > Regulation E - EFTA
Q:  If a non-bank P2P payment provider initiates a debit card “pass-through” payment from the consumer’s account held by a depository institution to a different person’s account at another institution, is the non-bank P2P payment provider considered a financial institution under Regulation E?
 
A:   Generally, yes.
 
As discussed in Electronic Fund Transfers Coverage: Financial Institutions Question 1, an entity that issues an access device and agrees with a consumer to provide EFT services, is considered a financial institution under Regulation E. As discussed in Electronic Fund Transfers Coverage: Transactions Questions 1 and 5 a debit card “pass-through” payment is considered an EFT under Regulation E. Thus, if an entity, including a non-bank P2P payment provider, enters into an agreement with a consumer to provide EFT services and issues an access device, and initiates a debit card “pass-through” payment, then that entity would be covered as a financial institution under Regulation E. Any entity defined as a financial institution under Regulation E has error resolution obligations in the event that a consumer notifies the financial institution of an error. 12 CFR 1005.11. See Electronic Fund Transfers Error Resolution Question 2 for more information about these error resolution obligations.
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This Q&A was contained in the CFPB’s Electronic Fund Transfers FAQs that were updated in December 2021 (which may be updated from time to time).  This may be found on the CFPB’s website here:  https://www.consumerfinance.gov/compliance/compliance-resources/deposit-accounts-resources/electronic-fund-transfers/electronic-fund-transfers-faqs/
 

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