Setup for Galileo Secured Credit

When setting up a Galileo's Secured Credit product, you must work with the sponsor bank and card network to create a business plan that meets bank and network requirements. This guide describes considerations for Galileo Secured Credit product.

Obtaining bank and network approval

Before you can offer a secured credit product, you must get a sponsoring bank. The bank that holds your customer accounts may not sponsor secured credit. If this is the case, you will need to use a separate sponsor bank for secured credit.

When you set up a secured credit product, you are adding a new program with new BINs. You will need approval for the new BINs from both your sponsor bank and from the card network. From the card networks’ perspective, the card behaves more like a DDA than revolving credit, so it is important to be clear about why you want a credit BIN. You can ask your Galileo representative to help you with your conversation with the network to avoid misunderstandings.

Underwriting and cardholder qualifications

Galileo does not provide underwriting. You must partner with a third-party underwriter to insure the accounts and to determine what qualifications a cardholder must have, such as minimum FICO score and minimum age.

Fees and interest

If you decide to set up fees for your Galileo Secured Credit product, you determine what kinds of fees to assess, the fee amounts, and when and how to assess them. For secured credit products, Galileo supports either monthly or annual fee assessment with the Assess Fee endpoint. Your Galileo representative can help you set up fee types for your program.

If you charge interest, you will need to calculate the amount and assess it from your own system. While there is a pending dispute on an account, you are responsible for stopping the accrual of interest and for adjusting the stoppage when the dispute is resolved.

Collateral account and money movement

For Galileo Secured Credit product, movement of funds into the collateral account is not automated by Galileo.

• The account that funds are moved from must be an account capable of holding and transferring money, such as a Galileo-hosted DDA, savings account, or an external spending account. Other types of accounts are possible as well.
• You determine when and how the cardholder can move funds into and out of the collateral account.
• You can move funds into the collateral account with a Create Account Transfer request.
• You can move funds out of the collateral account with either a Create Adjustment or a Create Payment request.
• Your sponsor bank may have conditions for allowing customers to move funds out of the collateral account.

Billing cycles

Galileo offers three billing cycle configurations for secured credit products, which can be configured at either the program or product level, according to your business plan and the agreement with your sponsor bank. You can configure a billing cycle at the date of account creation, the week of account creation, or set one billing cycle for all accounts. All billing cycle configurations are available for credit reporting. Each billing cycle configuration is described in detail below.

For information on implementing billing cycles in your system, see Implementing billing cycles in the Developer Setup for Galileo Secured Credit.

Billing cycle based on date of account creation

With this configuration, the customer’s billing cycle date is based on the date that the account is created. The billing cycle date can be any day within the range of 1–28. For example:

• If an account is created on day 15, then the billing cycle date is the 15th.
• If an account is created on day 29, 30, or 31, then the billing cycle date is the 28th.

Billing cycle based on week of account creation

When you set this configuration, a customer is assigned a billing cycle date based on the week that the account is created. There are four possible billing cycle dates: 1, 8, 16, and 24. These dates are assigned as follows:

• Billing cycle day 1 — Assigned to accounts created between days 1–7.
• Billing cycle day 2 — Assigned to accounts created between days 8–15.
• Billing cycle day 3 — Assigned to accounts created between days 16–23.
• Billing cycle day 4 — Assigned to accounts created between days 24–31.

One billing cycle for all accounts

With this configuration, you set a date within the range of 1–28 as the billing cycle date for all accounts. All customer billing cycles start on this date, regardless of when a customer account is created. This configuration may result in a shortened first billing cycle for some customers, depending on when the account was created.

One billing cycle for all accounts

With this configuration, you set a date within the range of 1–28 as the billing cycle date for all accounts. All customer billing cycles start on this date, regardless of when a customer account is created. This configuration may result in a shortened first billing cycle for some customers, depending on when the account was created.

Enable autopay

Autopay enables your customers to pay the full balance of the previously calculated billing cycle every month through scheduled, recurring transfers. This automated process helps ensure customer’s bills are paid regularly and on time. Autopay currently only applies to secured credit and payments for the full statement amount from the collateral account to the credit account. Galileo does not support partial payments, fixed payment amounts, or minimum payment amounts.

To be eligible for autopay, you must have billing cycles enabled so Galileo knows when a payment is due and for what amount. You also must be integrated with Galileo’s Events API to receive autopay-related events.

For information on implementing autopay in your system, see Enabling autopay in Developer Setup for Galileo Secured Credit.

Delinquency, default, and collections

For secured credit products that have a charge card, Galileo determines delinquency based on the first day of the customer's billing cycle and payment rules on the account. You determine when to send an account to collections. You may consider setting up a grace period before a delinquent account is defaulted. It is also common to set a spending block on delinquent accounts. Set up your internal system according to your business plan.

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Note

Galileo can handle reporting only for secured credit products that operate as a charge card with the full amount due each period, and not other credit products like secured cards with revolving credit.

For general information on credit reporting, see Credit Reporting at Galileo.

You provide your own terms and conditions to state what happens when a cardholder does not pay back the credit line. Galileo does not automatically move funds from the secured credit account to pay back the amount owed. If necessary, you may have a debt facilitator assist with collections. Galileo does not recommend that you close the account when the cardholder defaults, but that you block spending instead.

Reporting to credit bureaus

There is no legal requirement to report credit account activity to the three credit bureaus. Whether you report the charge card activity to the credit bureaus depends on whether you believe your cardholders will benefit from it. For more information on credit reporting, see the Credit Reporting at Galileo guide.

Chargebacks and disputes

For charge cards associated with a secured credit product, you may be able to use the same chargeback process that you have for debit cards if the card network is the same. However, you are responsible for setting up your own internal process to handle disputes for fees and interest for the secured credit product. There is no provisional credit for a charge card.

Statements and invoices

You can use RDFs and your own internal reporting to generate statements and invoices according to your agreement with your sponsoring bank. You can change the frequency of invoices depending on how far ahead you can float transactions. For example, you could have two billing cycles per month, or set up weekly billing cycles. See Billing cycle in this guide for more information.

CST support for Galileo Secured Credit

This section describes features in the CST related to secured credit.

Billing cycles

Galileo setup