A recent study by Fundtech revealed that a significant majority of banks expect that Section 1073 of Dodd-Frank will impose numerous costs on the institutions but will have little benefit for American consumers.
Section 1073 requires that consumers be allowed 30 minutes to cancel a cross-border transaction, though only two percent of banks indicate that consumers withdrawing orders happens frequently, and of the banks that were familiar with the frequency, 43 percent said that consumers never withdraw orders.
The survey revealed that 90 percent of banks believe Section 1073 will have a negative impact on their payments division and less than five percent expect the regulation to positively affect their business. Fifty-two percent of survey respondents indicated that the regulation would have a more negative impact on the consumer, and only two percent indicated that the rule would result in consumer benefits.
“We’ve also found that most U.S. financial institutions expect Dodd-Frank to have a negative impact on their businesses, with our own research finding that 50 percent believe it will have an extremely negative impact,” Nancy Atkinson, a senior analyst at Aite Group, said. “Banks will need to determine the importance of international electronic fund transfers to their businesses and how they will provide these services.”
The CFPB recently proposed changes to its remittance rules that require a remittance transfer provider to disclose to the consumer the exchange rate, taxes, fees and amount to be delivered abroad before the transfer is paid for. Providers must also provide customers with a proof of payment that details the same information provided in the pre-payment disclosure, as well as when the money is scheduled to arrive.
In addition to the 30-minute grace period, consumers are also entitled to their money back if they decide to cancel the transfer. Firms are also required to investigate any consumer issues with a transfer and resolve the issue via refund or another transfer. Companies are also responsible for the mistakes that may be made by employees during the remittance transfer.