The question came up during an overdraft meeting that relates to OD privileges associated with point of sale (POS) transactions.

The Bounce Protection overdraft program that we have can allow a participant to access fund and OD their account via POS. Our IT folks have configured the ATM to notify the customer that they are about to over draw their account and that fees may apply, etc… giving them the option to cancel the transaction.
The question popped-up in relation to POS.
If you go to Wal-Mart and use your ATM card to purchase items and it overdraws your account, there is no way for Wal-Mart to know that the transaction will overdraw your account. Thus, no notice or alert is offered to our customer.

Does anyone have an OD program that they allow customers to overdraw through POS? If so, was this lack of “Option to cancel” ever an issue?

I don't like the idea of OD via POS and would like to argue against this. However, I may not be seeing the whole picture. Our Ops manager says that it's no different that the customer writing a check at Wal-Mart (check conversion) and OD the acct.

Why be require to have the option at an ATM, but not at POS?

Our OverDraft Privilege program allows customers to overdraw at POS, and that fact is disclosed to them at the time of account opening. If they do not agree with the terms of the ODP program, they can Opt out of it then, or at any time. What if the customer has an emergency and needs to make that purchase even though they know they don't (or might not) have the funds in the account? They are probably glad to pay an overdraft fee in exchange for the approved POS purchase. We have never had an issue, but we make sure customers are educated on the process,

I found the following in the BOL InfoVault; however, you may want to search the site for additional/newer info.

Is OD Privilege Signage Required on ATMs?
David Dickinson & John Burnett, BOL Gurus
Guru Bios

Question: I am hearing that we now have to post signage on our proprietary ATMs that disclose to the customer that withdrawals at the ATM may cause them to access their overdraft privilege. Is this true? If so, what agency is mandating this? I would like to review the regulation. My understanding it that we have until July 1, 2006 to comply.

Answer by David Dickinson: Reg DD (TISA) is the regulation implementing several changes for banks because of overdraft privileges. John Burnett wrote a very good summary of the Reg DD changes. You can find it here.

I'm not aware of any ATM signage requirements. In fact, just the opposite: if you promote the OD privilege program, you trigger requirements [see §230.11(b)(3)]. Here are the new/revised sections of Reg DD to review:
Commentary to §230.4(b)(4) #5 - new account disclosure wording,
§230.6(a)(3) [and the Commentary to this section]: - Periodic Statement Disclosures,
Commentary to §230.8(a)#10 - Prohibited Advertisements
§230.11(a) - Periodic statement requirements for banks that promote OD's, and
§230.11(b) - The 4 Triggered disclosures when promoting OD's.
Answer by John Burnett: Be aware, however, that posting a notice on your ATM is one of the "best practices" recommended in the OPD Guidelines issued in February 2005, and you may be "promoting" an OD Privilege program if you simply disclose at the ATM a balance identified as including an ODP "coverage" amount, or a balance that does, in fact, include such an amount (without identifying it as such). However, you can post a notice that informs users that ATM withdrawals may trigger an OD fee, without triggering the § 230.11 requirements. It's one of the communications you can have with customers that isn't considered promoting the payment of overdrafts.

First published on BankersOnline.com 4/17/06

I'm still trying to figure out this issue. From what I've read and according to David in this other thread.. Available Balance Thread we cannot add a courtesy or line of credit overdraft balance in the available balance. I've talked to our systems person and he stated that we can only send one balance to the networks which will be the available balance. That means our customers will never be able to access their courtesy or line of credit overdraft balances at other ATMs or POS. The only way they will be able to access their overdrafts are by check or in person. Does this sound right? Is there a way to let customers access their overdraft using their debitcard?

We disclose our customer's balance with and without overdraft protection on their ATM receipt. The FDIC approved of this when they were here last. We also provide them with the best practice of an optout notice on our ATM when they are about to overdraw their account.

I understand how to handle our own ATMs. The problem I'm having is trying to figure out when customers go to other ATMs and use the networks (STAR, Plus, Interlink, etc.) and POS to access their account. We cannot give them two balances, the overdraft balance or ensure they receive the overdraft warning through the networks, so the only conclusion I can take from all this mess is that our customers cannot access their overdraft through the networks and POS. Somebody please tell me I'm wrong or how to get around it.

Who actually authorizes the ATM transactions? If your customers know they can access their OD coverage at an ATM and the authorization is done by YOUR systems, rather than by the network, you may be able to approve the withdrawal request regardless of the balance you have sent to the network. But be aware that ATM access to OD coverage is most definitely on regulators' radar screens.

Will your operating system allow you to provide one balance to your customers while using another for authorization purposes or do you have to use the same balance for both? Our prior system supported the use of separate balances (actually we had even more options for online vs. offline).

That's what I'm trying to figure out now. I've been talking to our Operations and IT groups and have been told that we can send two balances to our service provider, but the service provider states that it is all up to the requester (ATM or POS) as to what balance they ask for. Our service provider cannot control it. Does this sound right?

That does not sound right to me. They can only provide to the customer or merchant what you provide to them. During the course of a system implementation, you generally fill out forms identifying fields that drive these processes. You should be able to get some type of data map that shows how you are set up. The fields you would be looking for should be which balance you are providing for authorization purposes vs. ATM balance to customer.

I'm not sure if that makes sense, I am definitely not an IT guru. I just know what I have seen in the past.

That helps. I've never had to deal with the IT side of debitcards and ATM networks. I'm trying to learn how other banks handle it, so I can provide some examples when they are telling me they can't do it. Thanks!