How Overdraft Works at Galileo

Overdraft protection for spending accounts extends an immediate, predetermined line of credit to an account holder who has insufficient funds in their spending accounts to cover a transaction. This guide provides a high-level overview of how overdraft works at Galileo.

Account holder experience

From an account holder's perspective, an overdraft account does not necessarily appear as a separate account—they may experience it more like a feature or service that prevents their spending account from reaching a negative balance or from having transactions declined.

An account holder typically opt in to overdraft protection during account setup, or may opt in at any time, provided they meet the eligibility requirements. An account holder is not required to use overdraft funds to keep the overdraft account.

If an account holder makes a purchase that draws on overdraft funds, the account holder typically has 35 days to make a deposit to the spending account to repay the funds drawn on the overdraft account. The charge-off date is based on the oldest unpaid transaction from all spending accounts linked to the overdraft account. Based on your configuration, a fee may be assessed when a transaction uses overdraft funds and meets the de minimis condition outside of a grace period.

An account holder can become ineligible, or may opt out of overdraft at any time. When this occurs, the overdraft account is suspended and the account holder can no longer access overdraft.

Overdraft product setup overview

You and Galileo take the following steps to set up and activate overdraft protection for your customers:

1. You elect to offer one or more products with overdraft protection and develop an agreement with your issuing bank. See Configuring Overdraft Products for additional details.

2. You work with Galileo to configure the overdraft product and set eligibility verification rules at the product level.

3. When you onboard a new customer, you send a Create Account request to create the primary account.

4. You make the primary account eligible to use overdraft in one of the following ways:

• Configure eligibility at account creation using a product parameter (ODELG)
• Call the Set Account Feature endpoint to enable eligibility

5. When a customer opts in to overdraft protection, you send an Add Account request with the overdraft product ID to create an overdraft account associated with the DDA.
6. You activate the overdraft account by setting account feature 17 to P.

Consult Creating an Overdraft Account for details.

For information for linking overdraft protection to spending accounts in the CST, see Customer Service Tool: Overdraft Info.

Overdraft transaction overview

When an account holder attempts a purchase, an authorization process occurs within seconds to verify transaction eligibility, account authenticity, and funds availability. When a purchase exceeds the balance, funds from the overdraft line of credit are used to cover the purchase if the following are true:

• The account holder has opted-in to overdraft protection and has maintained eligibility.
• The purchase is eligible for overdraft funds.
• The purchase does not exceed the available overdraft limit.
  • The purchase is the fee amount + the purchase amount when overdrafts fees are enabled.

For a detailed explanation, see Transaction authorization and settlement using overdraft funds in Overdraft Workflows.