A customer presented a notice from their credit union that states the following:

"Visa USA Operating regulations require the Credit Union to notify you of the following: If you participate in STAR Bill Payment or other PIN-less debit transactions using your *****Credit Union Visa Debit Card, your transaction is considered a "non-Visa" transaction and may not receive Visa-associated protections and benefits. You should refer all STAR Bill Payment or other PIN-less debit transaction disputes to your biller rather than Visa."

Can anyone offer any insight on this? Are they doing this to prompt customers to run their transactions as debits so they can collect an exchange fee? Is this allowed?

It's a Visa rule and not something being initiated by the credit union. If you offer Visa branded debit cards then your institution may also be affected. If so, you should have updated your agreement. Also, Visa requires an annual disclosure to the consumer. This is from Wolters Kluwer:

Visa® USA (Visa) recently amended its operating rules. These amended rules affect card issuers that enable Non-Visa Debit Transaction processing. This article will explain the changes and help you determine whether your financial institution is affected. Most importantly, these rule changes may affect your cardholder agreements – or other account opening disclosures – and could require your financial institution to provide cardholders with an annual mailing.

Background
Prior to these rule changes, Visa allowed certain bill payment products and certain merchants to initiate payment transactions through non-Visa networks without a personal identification number (PIN). All other transactions initiated by cardholders on non-Visa networks required cardholders to enter a PIN.

In response to an anti-trust inquiry by the Department of Justice (DOJ) and several state attorneys general, Visa amended its operating rules to make PIN-less non-Visa transactions more widely available. The DOJ’s press release provides more detail.

A summary of the Visa Rules
The new rules allow an issuer to permit a cardholder to initiate a Visa debit card transaction on a non-Visa network without a PIN anywhere the card is accepted. However, Visa requires a card issuer permitting such transactions to satisfy several requirements. Under the Visa rule, financial institutions that enable Non-Visa Debit Transaction processing must provide cardholders with certain disclosures. The disclosures must include:
• A list of the debit networks for which such transactions are enabled
• Examples of the types of actions a cardholder may be required to make to initiate a Visa transaction, and
• A statement that certain provisions (such as the Visa zero-liability program) do not apply to such non-Visa transactions
The Visa rule also requires that these disclosures be provided on an annual or more frequent basis.

The rule was effective July 1, 2008. For institutions that enabled Non-Visa Debit Transaction processing prior to July 1, 2008, there is a January 1, 2009 mandatory compliance date. For institutions that did not enable Non-Visa Debit Transaction processing prior to July 1, 2008 – but plan to – must provide Visa with a 30-day notice prior to implementation. Visa Rule 1.10 et seq. provides substantial penalties for non-compliance.


http://www.bankersonline.com/forum/ubbth...rue#Post1083310

Is there a model form for this disclosure or must we purchase elsewhere? I just wondered if we could make our own form.

Just make your own form meeting the requirements of VISA Operating Regulations 6.2.A.7.b. You'll need to identify which debit networks your FI uses to enable these types of transactions (hence no "model form"):

Clearly communicate to its Cardholders at the time of implementation of such processing or at the time of issuance, and on an annual or more frequent basis thereafter, that it has enabled Non-Visa Debit Transaction processing and that it
does not require that all such transactions be authenticated by a PIN
• Clearly communicate to its Cardholders the identity of the debit networks for which such transactions are enabled on the Visa Check Card or Visa Debit Card
• Provide Cardholders with examples of the types of Cardholder actions that may be required to initiate a Visa Transaction on such Cards
• Clearly communicate to its Cardholders at the time of implementation of such processing or at the time of issuance, and on an annual or more frequent basis thereafter, that the provisions of its Cardholder agreement relating only to Visa Transactions are inapplicable to non-Visa transactions
6.2.A.7.c An Issuer that enabled Non-Visa Debit Transaction processing prior to July 1, 2008
must comply with the provisions of Section 6.2.A.7.b no later than January 1, 2009.

It is important to note that the purpose of this disclosure is to let cardholders know that pinless debit card transactions are not covered by VISA Zero Liability protections for a lost/stolen or compromised card. These transactions are, however, still covered by the liability schedule in Reg E 1005.6 so don't let the title of the thread confuse anyone into thinking the cardholder is out of luck when filing a claim on one of these transactions.

Just need to confirm that this is a VISA only issue, not mastercard. We're switching from VISA to MC next month and I'm updating our disclosures ... want to make sure I'm not overlooking anything. I see MC Rules 6.1.1 (5) talks about pinless transactions, but I can't find anything regarding a disclosure requirement.

MasterCard does not have a similar disclosure requirement.

Perfect. Thank you.