The rules governing the transfer of value between users of payment systems differ among payment systems. Rules allocating loss from unauthorized payment, erroneous payment, and the reversibility of payment vary according to whether payment is made by check, credit or debit card, wholesale wire transfer, or letter of credit. Thirty-five years after the New Payments Code failed to attract enough support to become law, academics and practitioners recently have proposed that payment system rules be uniform. This Article rejects this initially attractive position. It argues that the optimal standardization of payment system rules allows diverse rules among payment systems. The case for uniformity implicitly judges the reduction in information costs resulting from standardization to exceed the benefits from a choice among payment instruments with different rules. The Article argues that the proponents for uniformity overestimate the savings in information costs and ignore or underestimate the benefits to payment system users of different rules governing payment instruments. The technology for transferring value and predominant use of particular payment instruments differs, as does the capacity of payment system users and providers to avoid or reduce loss. Even cognitive error or unawareness of payment system rules among consumers does not always justify a single consumer-specific rule for consumer payments. While current law does not necessarily offer optimal diversity, diverse rules among some payment systems would be preferable to uniformity.
Clayton P. Gillette & Steven D. Walt,
Uniformity and Diversity in Payment Systems,
Chi.-Kent L. Rev.
Available at: https://scholarship.kentlaw.iit.edu/cklawreview/vol83/iss2/4