How Overdraft Works at Galileo

Overdraft protection for debit cards, mobile wallets, and consumer checking accounts extends an immediate, predetermined line of credit to an account holder who has insufficient funds in the DDADDA - Demand deposit account. The banking-industry term for an account from which funds can be withdrawn at any time, such as a checking account. to cover a transaction. This section 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 like a DDA – they may experience it more like a feature or service that prevents their DDA from reaching a negative balance or declining transactions.

An account holder typically opts in to overdraft protection during account setup, or may opt in at any time after account setup, as long as eligibility requirements are met. An account holder is not required to use overdraft funds to keep the overdraft account.

If an account holder makes a purchase that dips into overdraft funds, the account holder usually has 35 days to make a deposit to the DDA to repay the funds drawn on the overdraft account. 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 the overdraft line of credit.

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 a product 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 an 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 DDA.
  4. 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.

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 DDA 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 line of credit.

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

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