Section 1073 requires transparency on all potential fees and taxes, foreign exchange (FX) rates, fund delivery times before payments are initiated, and shifts error liability from the consumer to the institution. It also requires the service provider to issue a post-payment receipt disclosing the date that the beneficiary's account will be credited, as well as cancellation and error resolution rights. Section 1073 also allows 30 minutes for a consumer to request a recall of a payment.
The desperate search for solutions
Correspondent banking institutions will have to change their payment systems and convince their foreign correspondent banks – to whom Dodd-Frank does not apply – to disclose any fees and taxes they impose for routing transfers. This is not going to be easy.
Banks world-wide are desperately looking for systems and services to comply with Section 1073 ruling. It will take time, possibly years, nevertheless they will have to find solutions. Once these services are available for consumers, companies will obviously ask for the same service to be made available to them as well.
The Section 1073 ruling is a revolution waiting to happen. It will have more impact on international payments than anything else, including SEPA, because it is based on reasonable requirements:
- transparency on all potential fees and taxes, foreign exchange (FX) rates, fund delivery times before payments are initiated
- shifts error liability to the institution
- production of post-payment receipt disclosing the date that the beneficiary's account will be credited.
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