96-1
March 29, 1996
Re: Electronic Travelers Cheque
Dear M ________:
This is in reference to the proposal of ________ to sell the product it calls an electronic travelers cheque. in California. We write to clarify our letter of January 31, 1996 and to respond to the concerns that ________ has raised on behalf of ________.
In our letter, we concluded that an electronic travelers cheque does not meet the technical requirements of the definition of travelers check. in California Financial Code Section 1852(j) and, therefore, that the sale of electronic travelers cheques is not subject to the California Travelers Checks Act (Chapter 14A (commencing with Section 1851), Division 1 of the California Financial Code). Our ruling does not mean that ________ may not sell electronic travelers cheques in California. Rather, it means only that electronic travelers cheques do not fall under the California Travelers Checks Act.
There may be a question whether selling electronic travelers cheques constitutes accepting deposits and, therefore, whether only a bank may sell electronic travelers cheques in California. See California Financial Code Sections 102 and 3390. This matter has not yet been addressed, and we are reserving this question. However, in case we should decide that selling electronic travelers cheques does constitute accepting deposits and, therefore, that only a bank may sell electronic travelers cheques in California, we would give ________ notice of our decision, and we would not seek any civil fine or injunctive relief against ________ under California Financial Code Section 3395 on account of its sales of electronic travelers cheques in California at any time before the giving of such notice.
In short, then, we are not at this time objecting to ________ proposal to sell electronic travelers cheques in California.
As indicated in our letter of January 31, 1996, we want to explore the possibility of developing legislation to regulate the sale of stored value cards by nonbank entities. We would appreciate it if ________ would let us know whether it is interested in participating in the project. Also, we would be happy to receive any suggestions that ________ may have for such legislation.
Very truly yours,
CONRAD W. HEWITT
Superintendent of Banks
By
THOMAS M. LOUGHRAN
Senior Counsel
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