This questions references banks that have overdraft protection programs (not addressing overdraft lines of credit).

Assume that your customer is enrolled in your OD program. Also assume that your customer has opted into Reg E (ie. that is, your customer has requested the bank to pay and charge for ATM and debit card transactions when they cause an overdraft). Assume that the customer completes a debit card transaction on Monday (this debit card transaction is approved since there are sufficient funds in the customers account and/or under the overdraft program on Monday). HOWEVER when the transaction finally comes into the bank on Thursday, the customer no longer has sufficient funds in either his checking account and/or through the overdraft program.
Do you pay the debit card transaction or return it?
Do you charge the customer an overdraft fee?

Assume now that your customer HAS NOT opted in for Reg E ATM/debit card transactions. Same situation as above (funds are available on Monday when transaction is completed, BUT funds are not available when transactions comes into the Bank on Thursday). Customer still is enrolled in overdraft program.
Do you pay the debit card transaction or return it?
Do you charge the customer an overdraft fee?

This questions references banks that have overdraft protection programs (not addressing overdraft lines of credit).

Assume that your customer is enrolled in your OD program. Also assume that your customer has opted into Reg E (ie. that is, your customer has requested the bank to pay and charge for ATM and debit card transactions when they cause an overdraft). Assume that the customer completes a debit card transaction on Monday (this debit card transaction is approved since there are sufficient funds in the customers account and/or under the overdraft program on Monday). HOWEVER when the transaction finally comes into the bank on Thursday, the customer no longer has sufficient funds in either his checking account and/or through the overdraft program.
Do you pay the debit card transaction or return it? You can't return it under VISA rules.
Do you charge the customer an overdraft fee? If you approved into OD and they are opted-in, then you can charge a fee.

Assume now that your customer HAS NOT opted in for Reg E ATM/debit card transactions. Same situation as above (funds are available on Monday when transaction is completed, BUT funds are not available when transactions comes into the Bank on Thursday). Customer still is enrolled in overdraft program.
Do you pay the debit card transaction or return it? You can't return it under VISA rules.
Do you charge the customer an overdraft fee? No, you cannot charge them a fee.

Thanks, Dani,

A follow up question. The transaction was approved against sufficient funds in the checking account at the time of request.

Subsequently, due to the delay in presentment of the item by the merchant and the payment of inclearing checks against the customer's account, there were no longer sufficient funds in the checking account but there were in the OD program. In this case, do you charge the OD fee?

Yes, assuming you have that opt-in.

A follow-up question of 3 yrs to go:

You describe this as an overdraft protection program. What do you mean by that?

a. Overdrafts are covered by transfers from other accounts of the cardholder.

b. ATM and debit card transactions are authorized against a balance that is "padded" with a permitted overdraft amount.

John,

I am talking about b. ATM and debit card transactions