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OCC Opinions and Letters on Permissible Electronic Banking Activities |
| OCC publishes letters associated with charter approvals and other licensing activities, including interpretive letters. Some
of these letters provide interpretations of existing laws and regulations. This section includes significant approval
letters and interpretations associated with Internet banking activities. The following is a listing of topics in this section
that also serve as quick links to the referenced materials:
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Internet and PC Banking |
Effinity Bank, N.A. (now doing business as Treasury Bank, N.A), Conditional Approval No. 462 (April 4, 2001). This Internet-primary bank will deliver products and services to its retail customers through a variety of electronic delivery channels including the Internet, automated teller machines and/or remote service units. The bank may solicit "affinity" relationships with other groups and commercial entities to establish a private-label clientele. The bank will offer its products and services to customers or members of the affinity group under a private label. The bank will establish individual divisions to provide products and services specific to the needs expressed by affinity groups. The bank commits to comply with OCC guidance with respect to co-brands and private labels. This approval contained special conditions due to the nature of the conversion. These include a capital and funding maintenance agreement between the parent company and bank that must be considered satisfactory to the OCC and a written agreement with the OCC setting forth certain actions the bank will take if the bank does not achieve its Internet operating plan results.
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Conditonal Approval
No.462 |
Bridge Bank of Silicon Valley, National Association, Conditional Approval No. 427 (November 17, 2000). This is a recent example of a “bricks-and-clicks” national bank where the new bank will deliver its products and services through both a brick-and-mortar office and a transactional Internet site. It is a full-service community bank that will serve the Santa Clara and greater Silicon Valley area of California, focusing on the needs of individuals and small- to medium-sized businesses. The approval was granted subject to certain pre-opening requirements and ongoing conditions primarily addressing Internet security measures.
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Conditonal Approval
No.427 |
eComm National Bank, Conditional Approval No. 430 (November 13, 2000). This is a “bricks-and-clicks” national bank that will serve the Irvine, California area with a focus on small- to medium-sized businesses. Since the bank had not yet developed the specific plans and operational details for the proposed Internet site, we granted preliminary conditional approval without reliance upon the proposed Internet aspects. Any final plans to offer Internet banking will need to be approved by the OCC as a significant change in operating plan and will be given the same amount of scrutiny had the details been known during the charter application phase.Back to Top
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Conditonal Approval
No.430 |
Hutton National Bank, Approved April 13, 2000. Amplicon, Inc., received approval to establish Hutton National Bank, Santa Ana, California, which is to be a proposed Internet-only bank with a small business equipment leasing focus. The bank will purchase from its parent company on an ongoing basis lease payment streams for business equipment leases between $50,000 and $250,000. It will fund operations mostly through retail deposits. It will not have any traditional banking offices accessible to the public but will deliver products and services to customers through a variety of electronic delivery channels, including ATMs, the Internet via a transactional Web site, and a telephone customer service line. This approval contained special conditions due to the specialty purpose nature of the charter. These include a capital and funding maintenance agreement between the parent company and bank and a transaction pricing methodology, both of which must be considered satisfactory to the OCC prior to opening. Back to Top
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Conditonal Approval
No.383 |
Pointpathbank, National Association, Approved April 3, 2000. Synovus Financial Corporation received approval to establish a new, full-service Internet-only national bank to be located in Columbus, Georgia. The bank will offer traditional consumer products and services directly and through third party arrangements on a nationwide basis. The Bank will not have any traditional banking offices accessible to the public. It will deliver products and services to its customers through a variety of electronic delivery channels, such as automated teller machines, the Internet via a transactional Web site, and a toll free customer service line. Back to Top
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Conditonal Approval
No.368 |
AeroBank.Com, N.A., Approved January 29, 2000. This is the first Internet-only national bank to focus on the small business niche. The bank plans to offer loans and deposit products for small businesses and build a virtual mall with links to third parties providing services and products of particular interest to small businesses. The bank will deploy business development officers in major cities and establish deposit-taking ATMs in anticipated high-volume areas. Back to Top
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Conditional Approval
No.347 |
CIBC National Bank, Approved July 9, 1999. News Release July 12, 1999. Canadian Imperial Bank of Commerce, Toronto, Ontario, Canada (CIBC), received approval to establish a new full-service national bank in Maitland, Florida. The bank will not have any traditional banking offices but will deliver products and services through a variety of electronic delivery channels. Customers will conduct transactions through ATMs, Internet via a transactional Web site, and via a toll free customer service line. These delivery channels are available at kiosks located on the premises of retail stores for which the bank has a joint marketing arrangement. The bank will operate under a brand name associated with the retail store partner. Back to Top
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Conditional Approval
No.313 |
NextBank, Approved May 8, 1999. NextCard, Inc., San Francisco, CA (NCI), received approval to establish a new national, limited-purpose credit card bank. The proposed bank, NextBank, N.A., represents the second Internet bank charter approval granted by the OCC. NCI is establishing the Bank to fund and originate its own receivables. This role is currently performed by an unaffiliated state bank in conjunction with a third-party credit facility. NCI launched the NextCard VISA card in December 1997. The product is marketed exclusively through its Web site, www.nextcard.com. The NextCard can be used for both online and offline purchases. Key features of the NextCard product include an entirely online credit application and approval process and an Internet direct marketing approach. Back to Top
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Conditional Approval
No. 312 |
CompuBank, Approved August 20, 1997. CompuBank, NA, Houston, TX, is the first national bank charter approved to deliver products and services to customers primarily through electronic means and designated a limited-purpose bank. It will not have any traditional banking offices. In addition to using the mail, customers will conduct their banking transactions by personal computer or by telephoning the automated voice response system or customer service line. It will focus exclusively on checking and savings accounts and electronic bill payment services. Back to Top
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Conditional Approval
No. 253 |
Apollo, Interpretive Letter No. 742 (August 19, 1996). This legal opinion was the first time the OCC formally expressed the view that national banks offer Internet banking services and, in connection with those activities, provide full Internet access service. Back to Top
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Interpretive Letter
No. 742 |
Electronic Commerce |
| 1. Web Site Hosting Services |
MB Financial Bank, N.A., Corporate
Decision # 2002-13 (July 31, 2002). A national bank operating subsidiary engaged in leasing computer equipment under 12
U.S.C. 24(10) may, incidental to that leasing activity, offer website development services to leasing customers in order
to compete in the computer equipment leasing business. Back to Top
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Corporate Decision
No. 2002-13 |
Business First National Bank, Corporate Decision No. 2001-18 (July 3, 2001). A national bank may enable small business merchants to acquire a package electronic services that allows the merchants to create web stores and process electronic payments for purchases made over the Internet. The national bank, as finder, refers of the merchants to another unaffiliated company that provides website building software and web hosting services. The bank provides authorization and processing services necessary for the merchants to accept on-line credit and debit card payments in a secure environment. The bank also provides the merchants with reports on the activity of their web stores and answers to "frequently asked questions" on the use of the web design software based upon answers prepared and supplied by the software company. The bank helps other financial institutions to market as finders this package electronic commerce services to their own merchant customers. Back to Top
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Corporate Decision
No. 2001-18 |
Anexsys, Conditional Approval No. 361 (March 3, 2000). A national bank, under its finder authority, can develop and host a web site for a government agency that will allow the public, consumers, and other agencies to access or purchase services, information, forms, and products from that agency. Back to Top
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Conditional Approval
No. 361 |
EFS National Bank, Corporate Decision No. 2000-01 (January 29, 2000). A national bank can acquire a software company that owns software that enables users to make changes to their web sites where the bank will sell the software only as part of a bundle of Internet web hosting services provided to its merchant customers. Back to Top
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Corporate Decision
No. 2000-01 |
SPC, Inc., Corporate Decision No. 99-50 (Dec. 23, 1999). A national bank, as finder, may refer its merchant customers to a third party that will provide web site development and hosting services. Back to Top
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Corporate Decision
No. 99-50 |
Key (Econex Letter), Interpretive Letter No. 875 (October 31, 1999). A national bank may, incidental to its offering of commercially engaged web site hosting, provide web design services to its merchant customers. Back to Top
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Interpretive Letter
No. 875 |
Fleet, Interpretive Letter No. 856 (March 5, 1999). This OCC legal opinion found that a national bank can host commercially enabled web sites for small retailers. This service will enable a retailer to operate a web site that can receive and process credit card orders for its merchandise over the Internet. The bank will establish, register, and host the web site in the name of the retailer. It will also store the data representing the retailer's online catalog and provide periodic reports the retailer of site related activities. Finally, the bank will also provide associated payments and deposit services resulting from web-based transactions. The OCC found that the web site hosting activity is a form of electronic "finder" activity. Back to Top
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Interpretive Letter
No. 856 |
Southwest Bank, N.A., Interpretive Letter No. 928 (December 24, 2001). For merchants, government agencies, and non-profit service organizations that are Bank customers (the "Merchant Customers") with previously established web sites, a national bank may design and host a web site and provide software enabling an "electronic wallet" function" that will permit: 1) the Merchant Customers to process various forms of payments electronically from their end clients; 2) Merchant Customers’ end clients to electronically schedule and pay for events offered by a Customer organization; and 3) the Merchant Customer to acquire and compile information from their end clients in connection with the above described transactions to be used for authentication purposes and to facilitate future interactions between the Customer and its end client. Also, in connection with its Internet-related web-services, the Bank will consult with and advise its Merchant Customers on how the web site should be designed and operated so the web site hosted by the Bank and the related information is secure from unauthorized access while on the Bank's premises, while in transit to and from the Bank, and while in the Customer's possession. Back to Top
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Interpretive Letter
No. 928 |
| 2. Links between Bank Web Sites and Third Party Sites |
AeroBank.Com, N.A.,Conditional Approval No. 347 (January 29, 2000). National banks, under their finder authority, can obtain commitments in web linking agreements with third parties to provide preferential pricing or other terms to bank customers referred to the third party though the bank site. Back to Top
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Conditional Approval
No.347 |
Integrion I, Conditional Approval No. 221 (December 4, 1996). National banks, in the exercise of their finder authority, may establish hyperlinks between their home pages and the Internet pages of third party providers so that bank customers will be able to access those non-bank web sites from the bank site. Back to Top
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Conditional Approval
No. 221 |
| 3. Virtual Malls |
UMB, Conditional Approval No. 369 (February 25, 2000). A national bank may, incidental to its hosting of a virtual mall, provide at that site access to a limited amount of non-financial information (e.g., information on current events and weather) that is necessary to attract persons to the virtual mall site. Back to Top
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Conditional Approval
No. 369 |
Key/Econex, Interpretive Letter No. 875 (October 31, 1999). National banks may operate a "virtual mall," i.e., a bank-hosted set of web pages with a collection of links to third party web sites organized as to product type and available to bank customers so that bank customers can shop for a range of financial and non-financial products and services via links to sites of third party vendors and merchants can electronically confirm payment authorization before shipping goods. Back to Top
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Interpretive Letter
No. 875 |
| 4. Sale of Financial Services and Products over the Internet |
BNS, Interpretive Letter No. 889 (April 24, 2000). A national bank may make a minority investment in a firm that, as a registered broker, will use the Internet to provide retail brokerage services, lending, and insurance-related services to clients who are customers of financial institutions that have agreements with the firm. Back to Top
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Interpretive Letter
No. 889 |
| 5. Electronic Marketplace for Non-Financial Products over the Internet |
Barnett, Corporate Decision No. 97-60 (July 1, 1997). National bank may operate a web site providing consumers and dealers with detailed information on used cars for sale that meet purchaser preferences -- a virtual used car lot. Upon purchaser authorization, transmitting a purchase request to the seller with the consumer information so the seller can contact the purchaser. Site can also conduct electronic auctions for dealers. In connection with resulting sales and referrals, the bank could also offer a range of financial products related to vehicle purchases such as loan and lease arrangements. Back to Top
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Corporate Decision
No. 97-60 |
| 6. Electronic Facility To Support Collaborative Efforts Among Businesses |
Hemisphere National Bank, Conditional Approval No. 436 (December 19, 2000). The OCC granted conditional approval for this national bank in Miami, Florida to acquire a non-controlling investment in ImportCard.com. Through its web site, ImportCard.com will facilitate trade financing between U.S. exporters and Latin American importers by arranging financing, obtaining credit insurance, and acting as escrow and paying agent. Approval was granted subject to OCC’s standard conditions for non-controlling investments. Back to Top
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Conditonal Approval
No.436 |
UMB, Conditional Approval No. 369 (February 25, 2000). As a finder, a national bank may establish an Internet site that will function as an electronic central facility enabling businesses to negotiate and organize among themselves aggregate buying, selling, or financing efforts and for other collaborative efforts. Back to Top
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Conditional Approval
No. 369 |
Electronic Payments |
| 1. Electronic Bill Presentment |
Spectrum, Conditional Approval No. 332 (October 18, 1999). A subsidiary of a national bank may operate an electronic interbank switch to support electronic bill presentment services over the Internet. Back to Top
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Conditional Approval
No. 332 |
Transpoint, Conditional Approval No. 304 (March 5, 1999). A national bank may have a minority investment in limited liability companies that will offer electronic bill payment and presentment services through the Internet. The OCC found that electronic bill presentment is part of the business of banking. OCC has long held that billing and collecting services are permissible for national banks, whether done conventionally or electronically. The OCC has also recognized that as part of an electronic collection or payments process, national banks may store and transmit information related to the underlying transactions, such as electronic data interchange. Back to Top
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Conditional Approval
No. 304 |
| 2. Stored Value |
Mondex, Conditional Approval No. 220 (December 2, 1996). OCC permitted several national banks to acquire membership interests in two LLCs that will operate an "open" stored value card system. The creation, sale and redemption of electronic stored value in exchange for dollars is part of the business of banking because electronic equivalent of issuing circulating notes or other paper based payment devices like travelers checks. Back to Top
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Conditional Approval
No. 220 |
Huntington, Interpretive Letter No. 737 (August 19, 1996). A national bank may invest in LLC that will design, install and support closed SVC systems at universities and other institutions. Letter did not address the issuance of stored value (done by entity other than the LLC). LLC activities are basically two: 1) support services for closed SVC systems and 2) set-up those systems to support non-banking smart card functions (e.g., library records and building access control). The second is incidental to stored value function because "necessary for customer use" and because "necessary for successful marketing" of a SV system based upon smart card technology. Back to Top
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Interpretive Letter
No. 737 |
| 3. Merchant processing of credit cards via Internet |
FNB Omaha, Corporate Decision No. 99-35 (October 20, 1999). A national bank may provide, via Internet links, its merchant-processing customers with information and access to third party vendors of services for the merchant processing industry. Back to Top
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Corporate Decision
No. 99-35 |
Letter from June H. Allen. Senior Attorney (June 27, 1996) (unpublished). A national bank may permit its merchant customers to transmit their sales information over the Internet rather than physically submitting paper sales drafts or electronically transmitting their sales information by a dial terminal. Back to Top
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Letter
Unpublished |
| 4. Electronic Data Interchange (EDI) Services |
Interpretive Letter No. 732 (May 10, 1996). A national bank may acquire and hold a minority interest in a company that offers EDI services that allow businesses to send and receive payments, invoices and orders worldwide. The EDI services are "part of or incidental to business of banking." Back to Top
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Interpretive Letter
No. 732 |
| 5. Electronic Collection System on Behalf of Public Authority |
Anexsys, Conditional Approval No. 361 (March 3, 2000). A national bank may provide an electronic service to state governments that enables the governments to process motor vehicle title applications and related payments over the Internet. Back to Top
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Conditional Approval
No. 361 |
Interpretive Letter No. 731 (July 1, 1996) (E-Z Pass System Letter). A national bank may enter a contract with a public authority to operate, on behalf of the public authority, an electronic toll collection system because the activities involved are part of the business of banking (the collection and remittance of funds and payments) and thus permissible under 12 U.S.C. § 24(Seventh). Back to Top
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Interpretive Letter
No. 731 |
| 6. Dispensing Prepaid Alternate Media from ATMs |
Interpretive Letter No. 718 (March 14, 1996). A national bank may dispense "alternate media" supplied by merchants -- i.e. public transportation tickets, event and attraction tickets, gift certificates, prepaid phone cards, promotional and advertising materials, EBT script, and credit and debit cards -- from ATM machines. The letter emphasizes that the alternate media are only evidence of value; the transaction is not consummated until the cardholder uses the media to obtain the merchant's goods or services. Thus, the bank is not selling the merchants' goods or services, an activity prohibited by 12 U.S.C. § 24(Seventh). Back to Top
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Interpretive Letter
Not Available On-line |
| 7. Business to Business Electronic Payments Systems |
Identrus II, Corporate Decision No. 2002-4 (February 18, 2002). A national bank acting as a digital certificate authority may with other financial institutions provide support for electronic payment initiation products and services to commercial buyers and sellers by 1) using the banks’ digital certificates to verify payment initiation messages and 2) by developing and maintaining the operating rules for the electronic payments system.
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Corporate Decision
No. 2002-4 |
Digital Certification |
Identrus, Conditional Approval No. 339 (November 16, 1999), a multi-bank venture to establish an entity that will support a multiple bank CA network system. The central entity will act as the root CA for the sub-CA banks and will establish business rules so that customers of any sub-CAs can quickly and easily obtain verification of a certificate issued by any other CA bank in the system. Back to Top
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Conditional Approval
No. 339 |
Zions National Bank/Digital Signatures Trust, Conditional Approval No. 267 (January 12, 1998). A national bank may act as a certification authority to enable subscribers to generate digital signatures that verify the identity of a sender of an electronic message. Back to Top
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Conditional Approval
No. 267 |
Internet Access |
National Bank of Commerce, Conditional Approval No. 612 (November 21, 2003). National bank may offer internet access to its customers at branch office sites without charge. This is a permissible promotional activity since it is offered on a non-profit basis. The bank is expected to place appropriate controls on the service to protect the bank and its customers from risks of using publicly available terminals.
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Conditional Approval
No. 612 |
Wilbur National Bank, Conditional Approval No. 409 (August 10, 2000). National bank may establish a wholly owned operating subsidiary to provide, incidental to the parent bank's provision of Internet banking services, Internet access to bank customers in the bank's service area. Back to Top
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Conditional Approval
No. 409 |
Integrion, Conditional Approval No. 221 (December 4, 1996). National bank operating subsidiaries may acquire and hold a minority interests in the limited liability company ("LLC") that will supply a network for home banking systems. The LLC will also enable participating financial institutions to offer their customers full Internet access as part of a package of home banking services. Back to Top
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Conditional Approval
No. 221 |
Apollo, Interpretive Letter No. 742 (August 19, 1996). National banks may provide full Internet access service in connection with its Internet banking services and, incidental to that, may sell good faith excess capacity in access service to persons who are not Internet banking customers. Back to Top
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Interpretive Letter
No. 742 |
Data Processing |
Extraco Bank, N.A.,Corporate Decision # 2002-11 (June 28, 2002). A national bank’s operating subsidiary may provide advisory and consulting services to the bank’s customers who use the bank’s electronic retail or wholesale transactional services; the advice can cover the hardware, software, and other technologies necessary to use those services. The subsidiary may also provide advisory and consulting services to business customers on the hardware, software, and other technology necessary to enable those customers to process for themselves banking, economic, and financial information.
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Corporate Decision
No. 2002-11
Interpretive Letter
No. 986 |
Chase I-Vault, Interpretive Letter No. 888 (March 14, 2000). A national bank may, as part of the business of banking, provide electronic image processing services involving the loading, storage, and retrieval of banking, financial, and economic data and documents. Back to Top
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Interpretive Letter
No. 888 |
Anexsys, Conditional Approval No. 361 (March 3, 2000). As part of the business of banking, national banks can process banking, financial, or related economic data. This includes processing input data that is not itself "banking, financial, or economic data" if the processing seeks banking, financial, or economic correlations or relationships within the non-banking data or otherwise derives or produces information which is banking, financial, or economic in nature. Back to Top
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Conditional Approval
No. 361 |
Southwest Bank, N.A., Interpretive Letter No. 928 (December 24, 2001). A national bank may process for its merchant customers retail based information relating to the identity, shipping information, and payment information with respect to the merchants’ end customers because it involves the processing of banking, financial, and economic data. Back to Top
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Interpretive Letter
No. 928 |
Correspondent Banking |
Citizens National Bank, Corporate Decision No. 2000-08 (June 1, 2000). A national bank may provide to other financial institutions on a wholesale basis with merchant web hosting services so that those institutions may offer such services for resale to their merchant customers. Back to Top
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Corporate Decision
No. 2000-08 |
Peoples NB, Interpretive Letter No. 754 (November 6, 1996). A national bank operating subsidiary may sell computer network services and related hardware to other financial institutions as a correspondent banking service and, thus, part of the business of banking. The letter also concludes that the subsidiary's sale of full function hardware as part of a package of network services is "incidental" to those correspondent services. Back to Top
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Interpretive Letter
No. 754 |
Sale and Production of Software |
Bank One, N.A., Corporate Decision # 2003-6 (March 17, 2003) A national bank may establish an operating subsidiary that will purchase and then sell or license data processing software that performs functions regarding the charges and payments on a corporate credit card. Specifically, the software enables corporate credit card customers to automatically collect information on corporate card use and then to merge the data, to generate invoices, and to approve and make payments. Back to Top
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Corporate Decision
No. 2003-6 |
EFS National Bank, Corporate Decision No. 2000-01 (January 29, 2000). A national bank can acquire a software company that owns software that enables users to make changes to their web sites where the bank will sell the software only as part of a bundle of Internet web hosting services provided to its merchant customers. Back to Top
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Corporate Decision
No. 2000-01 |
Interpretive Letter No. 868 (August 16, 1999). A national bank may invest and take warrants in a company that develops, distributes, and supports software that enables secure payments over the Internet including software that makes on-line shopping easier for consumers by providing one-click shopping at the website of any Internet merchant that uses the software. The software requires a consumer to input pertinent billing and shipping information at the time of an initial on-line purchase with a participating merchant so that that consumer makes a later purchase from any merchant who uses the software, the information about the consumer is automatically provided and the consumer may complete the transaction simply by entering a password. Back to Top
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Interpretive Letter
No. 868 |
MECA, Interpretive Letter No. 677 (June 28, 1995). A national bank may engage in a joint venture to develop and distribute home banking and financial management software to be distributed through the bank and through retail outlets. Back to Top
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Interpretive Letter
Not Available On-line |
Excess Capacity |
Chase I-Vault, Interpretive Letter No. 888 (March 14, 2000). A national bank that has acquired an electronic image storage and retrieval system for banking purpose with good faith excess capacity can market that excess capacity to others to enable them to load, store, and retrieve nonfinancial and financial documents. Back to Top
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Interpretive Letter
No. 888 |
Electronic Safekeeping and Storage |
Zions First National Bank, Conditional Approval No. 479 (July 27, 2001). A national bank may provide an integrated, on-line information service for secure Web-based document storage and retrieval of documents and files containing personal information or valuable confidential trade or business information. Data will be stored on systems controlled by the bank and will be accessible by customers through the Internet or a dedicated line. Except for storage, access, and retrieval, the bank will not process or manipulate the information stored. The bank will offer its customers the ability to grant third parties controlled access to the stored documents and files so as to enable the use of document collaboration tools. Back to Top
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Conditional Approval
No. 479 |
