But where banks actually provide a lifeline to payday loan providers is through managing the real method the lenders process payments
The pipes of payday lending
Banks plan the payday lenders’ charges through the automated Clearing home, or ACH, the nationwide system for verifying and clearing monetary payments. The banking institutions function with intermediaries called third-party payment processors; this means the banking institutions plus the payday lenders never ever theoretically touch one another. Which comes in handy for the banking institutions, who will be mostly currently finding it tough to cope with the expense of reporting activity that is suspicious any monetary transactions they’re involved with, under anti-fraud and cash laundering laws and regulations.
The theory that banking institutions and payday loan providers are split is, some state, a fiction that is polite. Just banking institutions can provide these lenders the use of the re re re payments system enabling …Read more