Opening New DDA's with Debit or Credit Card

Posted By: Chelsea C

Opening New DDA's with Debit or Credit Card - 04/16/19 01:49 PM

Good morning,

Currently our institution is not in the practice of opening a DDA with a debit or credit card. We how have this available as an option, but are trying to work through the risks associated with the decision. We have looked into the Visa rules and what governs this and have verified it is an option. I am unable to locate any specifics about this in Reg DD. I know other institutions fund accounts this way, but what are the major concerns? Reputational risks? Delay in account creation? Considered a cash advance? Additional disclosures being required? Etc.?

Thank you!
Posted By: BrianC

Re: Opening New DDA's with Debit or Credit Card - 04/16/19 07:24 PM

How is the card processed, in person? key entered via the internet?
Posted By: Chelsea C

Re: Opening New DDA's with Debit or Credit Card - 04/18/19 01:12 PM

It would be keyed via internet.
Posted By: missmarybrewster

Re: Opening New DDA's with Debit or Credit Card - 04/18/19 01:52 PM

We open DDA's (and frankly, make deposits) with debit and credit cards.....but we run them as cash advances. With a $10.00 fee.

We have a $5.00 minimum opening deposit (for "membership"), and so often that's all a new member will fund their account with. I have a hard time charging a $10.00 fee for a $5.00 cash advance, but it is what it is.
Posted By: BrianC

Re: Opening New DDA's with Debit or Credit Card - 04/18/19 02:18 PM

So if an account is opened with a stolen debit card number, the rightful owner of the card has up to 120 days under VISA/MC rules to file a dispute with the issuing bank and your institution would receive a chargeback. There is significant ID Theft and fraud risk which also will create financial risk if the bank is on the hook for chargeback loss.