we offer credit cards through visa and debit/atm cards through mastercard. A local company that is not a customer of ours is going to be offering its employees paycards rather than paper checks and have informed the employees that they can go to any local bank for free withdrawals over the counter. Are we obligated to complete these transactions for non-customers and if so what enhanced dilligence would be required?

Prior bank was informed by a non-customer as well. Turns out that the cards were to be used through an ATM network.

Not sure I am understanding your answer to my question?

We did not "see" any of the non-customers they just went to the ATM.

I am not sure that this will be your case but we were just as concerned but it did not amount to any issues. Additionaly since the non-customer employees were able to used any ATM we did not even see an increase in our ATM activity. Some of these cards are set up simular to a debit card so it can be used for purchases.

If the issuing employer is not your customer, I don't see how you could be held to that unless there is something in any agreement that you might have with Visa or Mastercard.

IMHO - that would be like a company issuing paper checks to its employees and telling them they can go to any bank and cash those checks for free.

Your bank, sb1, is obligated to stick to the terms of the MasterCard and/or Visa as regards cash advances over the counter, and your ATM network agreements regarding cash withdrawals at your ATMs.

It's likely that you will not be permitted to impose a fee for handling the OTC cash advances, because the network agreement provides for your payment via interchange fees. On the ATM withdrawal side, you can impose whatever your existing "surcharge" is for withdrawals with cards you don't issue.

As for due diligence, I think it's pretty much a non-issue. Sure, you have the ID verification step that MasterCard or Visa imposes on cash advances, but that, as they say, is that.