We are an FDIC bank. One of our officers was meeting with a prospective client who is starting a payroll processing service and current banks with one of the largest 5 banks. Just as they were about to begin processing, the BANK told them that due to recent OCC regulations, they were not going to be able to process payrolls for them and that all national banks will be getting out of the payroll processing business. Can any OCC regulated bank shed any light on this? If this is true, could open the door for non-OCC banks.

Make sure you look before you leap. All regularotry agencies look very carefully at your due diligence into third party processors as they are a breeding ground for illicit activity. As for "all" national banks leaving this line of business behind, I think that is an overstatement. Many a bank employee who does not want to admit to the bank making a policy decision will blame the big bad government as a way of deflecting their customer's ire.

You may want to check out an upcoming BOL webinar on this topic.

Third Party Payment Processors - Revised Guidance April 10th

The FDIC just issued updated guidance on TPPP's. You might want to take a look at it, as it details very clearly the FDIC's position on that particular type of business.

FIL 3 - 2012 applies to banks supervised by the FDIC. Regardless, it reflects some good advice.

Good "primer" article on page 2, less than a year old.