Configuring Overdraft Products

The primary account product and the overdraft product are configured in separate programs. This guide describes considerations and configurable settings for overdraft products.

Considerations for overdraft account product setup

Before configuring an overdraft account product at Galileo, consider the following points.

Agreement with the issuing bank — You develop an agreement with your issuing bank to ensure you meet the bank’s requirements for overdraft protection. This agreement guides setup and configuration for your product at Galileo (some modifications may be necessary).
Mandated requirements for overdraft — In addition to your bank’s requirements, there may be other requirements that apply to your overdraft product.
Staffing requirements — You should have adequate staffing to handle the associated monitoring, reporting, and customer support needed to administer overdraft protection.
Overdraft opt-in — You decide how to present overdraft opt-in to customers during enrollment.
Available line of credit — You determine the credit limit to extend to overdraft account holders. You may set a tiered line of credit that depends on customer behavior (for example, customers who maintain a larger balance might have a higher credit limit).
Qualified overdraft transactions — Your issuing bank may have overdraft restrictions on scheduled payments, ATM withdrawals, cash back purchases, and other transactions.
Overdraft account ledger — If Galileo holds the ledger for your program, Galileo also manages the ledger balance for overdraft accounts. Otherwise, you or your bank hold the overdraft ledger balance.
Alternatives to overdraft — Consider whether the program's customer experience is better served by one of our secured credit products. Refer to the Secured Credit guide.

Primary and secondary accounts

When you create an overdraft account, only the primary account has access to the overdraft line of credit. Any secondary accounts, such as savings accounts, do not have access to the overdraft account. For more information on primary and secondary accounts, see Account types in the About Accounts guide.

Overdraft line of credit

The line of credit limit is the maximum amount of overdraft funds available to the account holder for transactions. The Galileo process that calculates the account holder’s line of credit limit and available overdraft funds runs multiple times per day.

You configure the line of credit limit for the program. An additional feature allows for “tiering” within the same program, typically based on account holder behavior. For example, a higher line of credit can be given to an account holder who makes larger deposits to their DDA account.

To authorize a transaction, Galileo evaluates available funds as either the DDA balance or the sum of the DDA balance and available overdraft line of credit. If the DDA balance is insufficient to cover the transaction, but the sum of the DDA balance and available overdraft is sufficient, the transaction is authorized.

Qualified transactions

You can configure your product to check for certain transaction types, available line of credit, existing overdraft fees, and other criteria before overdraft usage is authorized. For example, your issuing bank may require that you deny overdraft authorization for scheduled payments, withdrawals and cash transactions (e.g., ATM or cash back).

Overdraft fees

You can choose to charge account holders a fee for using overdraft funds. Fee settings, such as eligibility and fee amount are configurable during product setup. Fees are calculated and assessed as part of the overdraft settlement process.

The following are other overdraft-related fee configurations.

The de minimis threshold amounts associated with the amount of overdraft funds used in a single transaction and the cumulative amount of overdraft funds used.
The grace period before an overdraft fee is charged. When a grace period is set, an account holder who deposits funds to pay the full overdraft amount within the grace period avoids the fee.
The cap on the number and amount of overdraft-related fees assessed in a given time period.

Galileo will use any deposit or credit applied to the DDA account to pay off the overdraft amount used. The actual amount repaid is based on your configuration, the amount used, and the amount deposited. Generally, when overdraft funds are used, payments are applied to the overdraft account first and only funds that exceed that amount are applied to the DDA balance.

Galileo setup

Parameter	Product to set	Description
ODATM	Primary	Controls whether ATM and cash-back transactions can use overdraft. This parameter must be set to `N` for overdraft products.
ODBUF	Overdraft	Specifies the de minimis threshold for an overdraft transaction to trigger a fee. An overdraft transaction that is equal to or greater than this value triggers a fee.
ODCAE	Primary	Controls the eligibility check for overdraft accounts. This parameter is required for overdraft eligibility verification.
ODDMB	Overdraft	Specifies the minimum de minimis value before a fee is triggered. When the available overdraft balance is greater than this value, a fee is triggered.
ODELG	Primary	Controls whether a DDA is eligible to use overdraft upon account creation. This parameter is set on the primary product, such that account feature 17 is set to `E` (eligible) when a primary account is created. With the value set to `E` on the primary account, an associated overdraft account can then be manually created.
ODFDC	Primary	Contains text for the overdraft fee description that will display in the CST along with the merchant name and clearing date. Typical values are `Overdraft Transaction Fee` and `Overdraft Fee.`
ODFGP	Primary	Specifies the number of hours for the overdraft grace period. This period occurs between an overdraft transaction and the overdraft balance being paid off, wherein overdraft fees are negated, meaning that settled fees are reversed out and unsettled fees are changed to zero.
ODMOB	Primary	Specifies which action to take after a primary account is opted out of overdraft: move the overdraft balance and close the primary and overdraft accounts, move the overdraft balance and charge off the account, move the overdraft balance only, or do nothing.
ODOBI	Primary	Specifies which value to assign to account feature 17 (overdraft eligibility or participation) when a primary account opts out of overdraft.
ODOUT	Primary	Controls whether the cardholder can opt out of overdraft on the Galileo-hosted cardholder website.
ODPAA	Primary	Specifies the number of days after which all available funds in a primary account are used to pay the overdraft balance, even when the available primary balance is less than the overdraft amount.
ODPDN	Primary	Specifies the number of days before an overdraft account with an unpaid balance is paid off, driving the primary account negative. This parameter takes effect when the available primary balance is less than the overdraft balance.
ODPSQ	Primary	Specifies the number of days after an overdraft transaction after which the account is marked delinquent, if there is no payment into overdraft.