Overdraft Workflows

Transaction authorization and settlement using overdraft funds

This flowchart illustrates authorization and settlement for a card transaction that uses overdraft funds.

1. An account holder makes a purchase over card network rails and the card network sends an authorization request. The DDA has insufficient funds to cover the purchase, but the account is linked to an overdraft account.
2. Galileo determines whether the authorization request is eligible to draw from the overdraft account. Eligibility depends on whether the transaction is a qualifying purchase and if there are sufficient funds available in the overdraft account line of credit.
3. If the authorization is not eligible for overdraft funds, Galileo denies the authorization request and sends response code 51 to the card network.
4. If the authorization is eligible for overdraft funds, Galileo places a hold for the authorized amount on the overdraft account.
   a. Galileo sends the BAUT: auth event and the ODAA: overdraft_authorization event.
   b. If this is the first time the DDA has drawn on the overdraft account since the overdraft account was fully repaid, Galileo sends the ODNB: overdraft_negative_balance event.
   c. If the authorization exceeds de minimis and triggers a grace period for fee repayment, Galileo sends the ODGP: overdraft_start_grace_period event.
5. The card network sends a settlement batch file.
6. Galileo backs out the authorization hold on the primary account and posts the overdraft funds to the primary account, bringing the DDA balance to 0.
7. Galileo sends the SETL: setl event.

Overdraft fees

An overdraft fee is usually charged when a primary account draws from its overdraft account, with some exceptions. This flowchart illustrates the process to determine when overdraft fees are charged to an account.

1. An account holder makes a purchase with insufficient funds in the primary account. The DDA draws on its overdraft account.
2. Galileo determines if the amount owed to the overdraft account exceeds the de minimis threshold.
3. If the overdraft amount does not exceed de minimis, Galileo does not post an overdraft fee.
4. If the amount owed to the overdraft account exceeds de minimis, Galileo determines if an overdraft grace period is in effect on the amount owed.
   • If a grace period is in effect, Galileo does not apply an overdraft fee. Galileo will reevaluate the fee when the grace period ends.
5. If a grace period is not in effect Galileo determines if the overdraft fee would exceed the fee cap.
6. If the overdraft fee would exceed the fee cap, Galileo does not post the overdraft fee, but starts the process to suspend the overdraft account.
   • Galileo sends the ODOT: overdraft_opt_out and the ODSC: overdraft_status_change events.
7. If the overdraft fee does not exceed the fee cap, Galileo posts the overdraft fee to the primary account, driving the account balance negative. Galileo sends the BFEE: fee event.

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Note

Overdraft fees do not trigger repayment. The DDA balance will remain negative until the overdraft amount is paid.

Overdraft repayment

This flowchart illustrates the process to repay funds owed on an overdraft account.

1. A payment is made to a DDA that is linked to an overdraft account. Galileo sends the BPMT: pmt event.
2. If funds are not owed on the overdraft account, the full payment is posted to the DDA balance after any fees are paid.
3. If funds are owed on the overdraft account once settlement occurs:
   a. The payment is first posted to the overdraft balance.
   b. The remaining amount is posted to the DDA after any fees are paid.

Charge-off

When an overdraft account remains unpaid for a specified period (usually 35 days), a process to transfer funds and charge-off the account is triggered. This flowchart illustrates a possible configuration for the charge-off process.

1. An overdraft account remains unpaid for the number of days set by ODPDN (typically 35 days).
2. The owed funds are moved out of the overdraft account and into the DDA. The total amount owed is now the negative primary account balance combined with the overdraft line of credit consumed (configured with ODPAA).
3. The primary account and overdraft account are set to status: R (charge-off) (configured with ODMOB).
4. Account feature 17 (overdraft eligibility or participation) is set to I (ineligible). The account holder can no longer use the overdraft account (configured with ODOBI).
5. Galileo sends the ODOT: overdraft_opt_out event.