Courtesy Pay programs are a safety net for members’ checking accounts when funds are low and they don’t have sufficient funds to cover these transactions. Courtesy Pay is designed to give members peace of mind by providing coverage if they inadvertently overdraft their account, or even make a mistake. It’s an added measure to help members when they need it. Plus, it’s a reliable source of non-interest income for your credit union.
Under the Federal Reserve System, Regulation E protects consumers when electronic funds are transferred. Electronic fund transfers include: ATMs, direct deposit, gift cards, overdraft, point of sale transfers, remittances and telephone transfers. Regulation topics cover the disclosure of fees and limits, error correction, liability, preauthorized transfers and receipts.
Specifically, the Consumer Financial Protection Bureau states: “the term “overdraft service” means a service under which a financial institution assesses a fee or charge on a consumer’s account held by the institution for paying a transaction (including a check or other item) when the consumer has insufficient or unavailable funds in the account.”
In summary, to protect consumers, credit union members must enroll, or opt-in, to cover those transactions and associated fees. To complete the enrollment process, credit unions can use a variety of methods to do this, such as telephone, mail, email or an online platform, which has become the most common solution due to the expediency of processing. It doesn’t cost anything for your members to enroll into Courtesy Pay, as fees will be assessed on a per-transaction basis, and debit card transactions are covered.
At IMSI, we’ve developed a Courtesy Pay solution that is fully integrated with core systems and handles the regulatory requirement for member notifications. It’s an affordable, easy and quick solution that can be installed in-house or hosted. With our system, members and staff can opt in as little as two minutes. Additionally, it’ll help ensure your credit union is compliant and meet service goals. Contact us to learn more about this solution.