Our ATM/EFT service provider just announced a new service: Preathorized Payment Cancellation Service. Apparently, their service will allow customers to stop payment on preauthorized or recurring Visa Check Card transactions.

What?!? My understanding has always been that preauthorized transactions cannot be stopped. In fact, our EFT disclosure states that stop payments cannot be made on POS transactions, nor can customers use Visa Check Cards for recurring bills!

Our service provider is claiming that this will "help issuers meet Regulation E Requirements", and will "reduce disputes from recurring payments."

Huh? Can someone shed some light on this for me? I'm in a quandry.

I'm not sure where you got that Visa Check Cards cannot be used for recurring transactions. Visa encourages this type of use. If you have access to Visa Online (it's a members only website) there is a lot of information on the Preauthorized Payment Cancellation Service. It's a new service offered by Visa that WILL allow for a stop payment to be placed on a recurring charge. I would suggest you check out Visa Online so you can read for yourself!

Regulation E requires that the consumer have a right to stop any preauthorized transfer from his account (there is no exception for Visa or MC debits). The key is that preauthorized means recurring, and the customer must get the stop order to the bank at least 3 business days before it's due to post. Stops under Reg. E are valid only for a particular occurrence of a recurring debit. The customer must arrange with the merchant for cancelation of the on-going authorization.

Just to add a clarification: the Preauthorized Payment Cancellation Service is provided by Visa. So the "stop payment" would be placed by your processor on the Visa system. Then, if an authorization is sent through, it will be declined at that time. This way, you won't have to go through the whole dispute process with Visa (utilizing the "cancelled recurring transaction" reason code). This service is an entirely different system from the one you currently use to place stop payments on checks. Hope that makes it more clear.

Thanks to everyone for your feedback.

I guess I'm still having a hard time reconciling this service with the boilerplate Bankers Systems language in our disclosure: "You may not place a stop payment on any point-of-sale transaction. You may not enter into any preauthorized payment arrangements using your Visa Check Card."

I'm going to contact Bankers Systems, but does anyone know if their language is inaccurate?