A Board member wants a higher online bill payment amount then what we currently offer our customers so Management would like to increase it (currently set at $10000).

I stated, if we do it, it must be in the same terms as other customers and the same requirements.

Management wanted an approval process so it would be on a case-by-case basis. I suggested a credit approval process like ACH customers. Does this sound correct?

Also, what about Reg O requirements?

Is there any regulatory guidance I can read on this specific type of transaction? I could not locate any.

Thoughts are appreciated!

I don't believe that Reg O would even apply in this situation as Online Bill Payment has nothing to do with credit. In the event that a customer issues a check (through Online Bill Pay) in excess of their account balance your bank has the right to return the check NSF. A customer could just as easily write a $50,000 check from their own check book, why not let them use Bill Pay to do it.

ACH payments would be a different story. In that case you would want to verify that the funds were available before the money was sent.

I reviewed our vendor contract and at the time our customer issues a bill payment, we are obligated to pay it. So we would not have the opportunity to return the item which means we are guaranteeing the funds. This would bring Reg. O into affect. Correct?

Thank you!