Gov. Christie Signs Electronic Payments Bill into Law

Gov. Chris Christie recently signed a bill into law that will make it easier and cheaper for New Jersey municipalities to process electronic payments. The bill, Assembly Bill No. 3851, authorizes certain local units to adopt policies for the payment of certain claims through the use of standard electronic funds transfer technologies.

Gov. Christie Signs Electronic Payments Bill into Law

The goal of the new law is to simplify the procedures that local governments must follow when seeking to implement the use of modern payment methods in place of more expensive paper alternatives. According, it provides that the governing body of a local unit may adopt policies, by ordinance or resolution, as appropriate, for the payment of claims through the use of one or more standard electronic funds transfer technologies in lieu of payment through the use of signed checks or warrants.

The law requires any policies adopted by local units to explicitly list the forms of standard electronic funds transfer technologies that may be used by that local unit. Under the bill, “standard electronic funds transfer technologies” are defined to include, but not be limited to, wire transfers, automated clearing house transactions, and debit cards. A “local unit” is defined to include a contracting unit as defined by the “Local Public Contracts Law,” a board of education as defined by the “Public School Contracts Law,” and a county college as defined by the “County College Contracts Law.”

The new law requires policies adopted by local units for the payment of claims through standard electronic funds transfer technologies to designate the chief financial officer of the local unit as being responsible for the oversight and administration of the disbursement policy and associated systems. To accomplish this duty, the chief financial officer is required to document and implement internal controls sufficient to ensure safe and proper use of the system and mitigate the potential for fraud and abuse.

The Local Finance Board, in consultation with the Commissioner of Education, must now adopt rules and regulations to clarify the implementation and use of standard electronic funds transfer technologies. We encourage readers to stay tuned for updates.

For more information about the new law or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.

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