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#164 - 12/07/00 08:50 PM Reg D - Permissible Transactions
Anonymous
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Are transfers from savings accounts made through our banks' website included in the six per month limitation set forth in Regulation D?

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#165 - 12/07/00 10:34 PM Re: Reg D - Permissible Transactions
redsfan Offline
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Yes, they are included. Regulation D consideers such transactions to have been made tlelphonically.
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#166 - 12/08/00 01:58 AM Re: Reg D - Permissible Transactions
Richard Insley Offline
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Has the Fed issued something indicating that online payments count toward the 6 per month? Looks like they should count toward the 3 instead. If these payments are functionally equivalent to debit card or check writing convenience, then it's hard to imagine the Fed allowing 6 per month.
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#167 - 12/08/00 03:18 AM Re: Reg D - Permissible Transactions
Andy_Z Offline
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I can see including them in the 6, but I don't know that I would classify it as a "check, draft, debit card or similar order". Telephonic transfers include data transmission. I'd classify them there.

I'm glad Richard isn't a regulator anymore. : )

The acid test for whether it counts is whether or not it is convenient to the customer. If it is, it counts.

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Andy Zavoina
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#168 - 12/11/00 04:10 PM Re: Reg D - Permissible Transactions
Lucy Griffin Offline

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The transfers count for the 6 total if they come in over any kind of wire, including a website.

I have just run into a customer misunderstanding. Some customers seem to think that the count is triggered by the number of times they log on rather than the number of transfers they order. So they may log on only 6 times, but submit several transfers each time they log on. This exceeds the limitation pretty fast.


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#169 - 12/13/00 09:17 PM Re: Reg D - Permissible Transactions
Anonymous
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If an atm card accesses a savings account for a POS transaction than that would also count towards the 6 transactions per month. I had a little debate going because ATM transactions are unlimited but I pointed out that was only when the money was going to the customer. If it goes to a third party than it is subject to the 6 per month limit - correct?

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#170 - 12/13/00 09:59 PM Re: Reg D - Permissible Transactions
Andy_Z Offline
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Yes Terrie, I agree. That is the key reason many systems block ATM cards from Savings - POS capabilities.

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Andy Zavoina
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#171 - 12/15/00 05:45 AM Re: Reg D - Permissible Transactions
Deena Offline
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Wouldn't a POS transfer from a savings account count toward the "3" rather than the "6"?

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#172 - 12/14/00 06:32 PM Re: Reg D - Permissible Transactions
Andy_Z Offline
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Yes, if they were allowed they would be in the "no more than 3 of which may be by check, draft, debit card or similar order". My quote is from memory so it may not be exact.

My point is, I would recommend not allowing these at all unless your system is tracking them. Reviewing them on an ex post basis for even a small customer base would prove a difficult task. And knowing that regardless of the disclosures, some customers would attempt to use it excessively and be refused, is a customer service nightmare.

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Andy Zavoina
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Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#173 - 12/14/00 07:48 PM Re: Reg D - Permissible Transactions
John Burnett Offline
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A lot of ATM networks won't permit a PINned POS debit to anything other than a DDA/NOW. Of course, many banks' MMDA accounts use the DDA logic, which could permit POS from MMDAs. Then the bank needs to refuse to issue cards that can be used to debit MMDAs at POS.
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#174 - 12/15/00 11:33 AM Re: Reg D - Permissible Transactions
Richard Insley Offline
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Although the concensus of posters to this thread appears to be that Internet banking system payments to 3rd parties count toward the 6 and not 3 monthly allowable MMDA payments, no one has cited any written authority. I agree that online bill payments that are recurring (insurance premiums, mortgage payments, alimony pmts, etc.) should count toward 6. I still have trouble clasifying non-recurring e-payments as "inconvenient." If we believe our own promotions, this payment capability is the height of convenience--I sit down in front of my PC and in seconds knock out an e-check for $5 to each of the 7 previous posters to this thread. It's easy. It's convenient. It's not covered by the limit of 3?

[This message has been edited by Richard Insley (edited 12-15-2000).]

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#175 - 12/15/00 02:24 PM Re: Reg D - Permissible Transactions
John Burnett Offline
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OK, Richard, so where is my check? And don't tell me "it's in the e-mail"!

Happy Holidays, all.

[This message has been edited by John Burnett (edited 12-15-2000).]

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#176 - 12/15/00 03:18 PM Re: Reg D - Permissible Transactions
Andy_Z Offline
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Richard, I put it in the "6" category because it is not a "check, draft, debit card, or similar order", as in a physical item. Although I can see where you are coming from, it could subjectively be defined as a "similar order" based on its use and convenience.

Then again, I haven't read anything that indicates it should be in the "3" either. Certainly caution may be warranted here.

Any idea if there will be any official interpretation here or if we should ask? We may have to be careful what we ask for. Sometimes forgiveness is easier to ask for than permission. But that reasoning is all the more reason to go into this with our eyes open.

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Andy Zavoina
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Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#177 - 12/15/00 04:34 PM Re: Reg D - Permissible Transactions
Richard Insley Offline
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I'm not trying to talk the Fed into something new, only scanning for the burried landmines. MMDA-related Reg D "misunderstandings" can have an unacceptably high cost. Since reserve requirements preceeded web banking by almost 3/4 century, the lack of regulatory clarity isn't a surprize. I guess we need some guidance on:
- what "similar order" means
- will there be a warning before detonation

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#178 - 12/15/00 06:17 PM Re: Reg D - Permissible Transactions
John Burnett Offline
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At the risk of being labeled a "revisionist," it would really be nice if the Fed would either get rid of the old opinions on savings account transfer limits in the FRRS, or annotate each one for which the more liberal "6" per month limit applies since their melding of the savings and MMDA definitions several years back.
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#179 - 12/15/00 06:47 PM Re: Reg D - Permissible Transactions
Mary Beth Guard Offline
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I propose we write a letter to the FRB requesting guidance on this. I'll be happy to send it (and will include anyone on it who would like to be included) if I can incorporate any suggestions and ideas any of you may have. Here's a start:

Dear _______________:

The purpose of this letter is to request further guidance from the Federal Reserve regarding how the Regulation D restrictions and limitations on money market and savings deposits apply to certain transactions.

In Regulation D, at Section 204.2(d)(2), the term "savings deposit" is said to mean: "A deposit or account, such as an account commonly known as a passbook savings account, a statement savings account, or as a money market deposit account (MMDA), that otherwise meets the requirements of Sec. 204.2(d)(1) and from which, under the terms of the deposit contract or by practice of the depository institution, the depositor is permitted or authorized to make no more than six transfers and withdrawals, or a combination of such transfers and withdrawals, per calendar month or statement cycle (or similar period) of at least four weeks, to another account (including a transaction account) of the depositor at the same institution or to a third party by means of a preauthorized or automatic transfer, or telephonic (including data transmission) agreement, order or instruction, and no more than three of the six such transfers may be made by check, draft, debit card, or similar order made by the depositor and payable to third parties. * * * Such an account is not a transaction account by virtue of an arrangement that permits transfers for the purpose of repaying loans and associated expenses at the same depository institution (as originator or servicer) or that permits transfers of funds from this account to another account of the same depositor at the same institution or permits withdrawals (payments directly to the depositor) from the account when such transfers or withdrawals are made by mail, messenger, automated teller machine, or in person or when such withdrawals are made by telephone (via check mailed to the depositor) regardless of the number of such transfers or withdrawals."

Since this language was originally incorporated into Regulation D, technology has evolved rapidly, making possible new and novel types of of transactions. It is the application of the Regulation to these new types of transactions that we seek guidance on.

Specifically, we ask for responses to the following queries:

1. When a customer uses online banking to direct that a payment be made from his money market or savings account to a third party, is that transaction simply one of the six permitted covered transfers/withdrawals during the month, or would it be treated as being similar to a debit card transaction and subject to the more restrictive limit of three transactions? In other words, what falls within the realm of "check, draft, debit card, or similar order"?

2. Are all electronic bill payments made from a savings account or MMDA considered to be by "check, draft, debit card, or similar order" and thus subject to the limitation of three per month?

3. Is there any additional guidance or direction you can provide about the application of these Regulation D restrictions to online banking and bill paying activities?

etc.


Ideas? Suggestions?


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#180 - 12/15/00 09:07 PM Re: Reg D - Permissible Transactions
Andy_Z Offline
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It certainly asks the questions we have. Is there anything additional that needs to be asked?

With the recent bills to increase the number of transactions and to provide expansion into more commercial accounts, would the Fed rule on this? I suppose those bills will soon be officially "dead", but I would also believe they have a chance of returning. I can't predict how the new congress will react to our industry.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

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AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#181 - 12/15/00 10:26 PM Re: Reg D - Permissible Transactions
Richard Insley Offline
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Good letter, MB. Thanks for taking the bull by the horns & putting this issue on the Fed's endless list of e-matters begging interpretation. As more and more banks offer online transactions, the answer to this question will become more important.
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#182 - 12/18/00 12:51 PM Re: Reg D - Permissible Transactions
John Burnett Offline
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In all seriousness, I would suggest, Mary Beth, that you look back to my suggestion that the Fed review all of its published opinions on the question of transaction limits on savings and MMDA accounts, and eliminate those that are rendered erroneous by the combination of savings and MMDA accounts into one definition, and that they create one comprehensive opinion that addresses, in one place, all of the arcane interpretations they've rendered in the past. This comprehensive treatment should encompass all currently-known payment technologies and look to the future to the extent possible.
I, for one, think the 107th Congress is going to have more weighty things on its mind than addressing interest on DDA accounts.
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#183 - 12/18/00 01:58 PM Re: Reg D - Permissible Transactions
D. Whitney Offline
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Hermitage PA US
When setting our Reg. D monthly monitoring guidelines, I applied a different approach than what has been discussed thus far. Bill Payments count toward the 3 per month limit (payable to a third party). Transfers among the customer's accounts at our bank count toward the 6 per month limit.
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#184 - 05/29/01 03:20 PM Re: Reg D - Permissible Transactions
Anonymous
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I have taken the approach of counting the e-payments to third parties as one of the 3 and transfers among accounts with our bank as part of the 6. Any way you look at it, an e-payment to a third party is still a third party item. Some e-bill services issue checks and/or e-payments......I am taking the more cautious approach and count them as a third-party transaction. Clarification from the Fed would be a valuable source for all of who are struggling to do the "right thing" for compliance and the customer.

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