Our commercial banking area would like to offer debit cards for business checking accounts. My first thought is that since Reg E is a consumer regulation, there is no protection to the non-consumer cardholder other than what we are willing to offer. I know other banks are doing this. Anyone out there offering this to their business customers? And if so, what are the parameters?

Someone please correct me if I'm wrong, but Reg E applies to "consumers" which are defined as "natural persons". So I recommended to our commercial department to provide the Reg E disclosures to sole proprietors who apply for business account debit cards. Corporations and partnerships would not have to receive the Reg E disclosure. For practical purposes, we are treating all billing errors as subject to the Reg E timetables. Another consideration you'll want to ponder is whether you want a written agreement with your commercial customers that addresses peculiarities in the multi-card commercial debit setting - - for example, that the customer not the employee end-user is responsible for unauthorized use. There could be other things to include - - you might want to look at a commercial credit card agreement for ideas.

If this is a VISA or MasterCard branded product, be sure to check their rules as well.

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

We have offered business debit cards for a couple of years. It has been very successful with approximately 700 business accounts holding cards. Around 35 to 40% of the cards are used on a monthly basis generating between 2100 and 2800 transactions on a monthly basis during 2001. YTD dollar transactions amount to just under $600,000 or average $ transaction is $60.00.

This card is only offered to signers on the business account. The application is sent to Visa for issuance of the cards. The business account is responsible for charge backs to the account. But disputes over the transactions do fall under regulation E guidelines.

I hope this helps.

Reg. E does not apply to business debit card transactions. If you look at the definition of account for Reg. E purposes, it says, "a demand deposit, savings or other consumer asset account held directly or indirectly by a financial institution and established primarily for personal, family or household purposts." Our business debit card disclosures specify that the card must be attached to a business account and used for business purchases only.

Thanks, Kristen. I knew there was something that kept Reg E in the consumer purpose world, but couldn't put my finger on it. You hit the nail on the head!

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Jim Bedsole, CRCM, CBA, CFSA

Opinions expressed are my own, and do not necessarily reflect those of my employer.