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Nov 24, 2008
Categories: Accounts

Recent Changes to VISA Operating Regulations - January 1 Deadline

Credit unions that use VISA should be aware of a recent change to VISA's Operating Regulations.  The changes were effective July 1, 2008 and card issuers have a mandatory compliance date of January 1, 2009.

The changes include two definitional changes:

"Non-Visa Debit Transaction—Effective July 1, 2008, an act between a Visa Check Card or Visa Debit Card Cardholder and a merchant that results in the generation of a transaction on a PIN-Debit Network.

PIN-Debit Network—Effective July 1, 2008, a non-Visa debit network that typically authenticates transactions by use of a PIN that is not generally known as, marketed as, or enabled as a competitive general-purpose card program, or other prohibited payment program, either directly or through a joint acceptance agreement."  

The first objective is to determine if the network(s) your credit union uses allow "Non-Visa Debit Transactions."  Karl Leslie of Wolters Kluwer Financial Services has written a wonderful article summarizing the rule changes and helping financial institutions determine if they need to comply.

"Determining whether a financial institution has enabled Non-Visa Debit Transaction processing appears to be dependant on the network an institution uses. In other words, if your network has enabled Non-Visa Debit Transaction processing, then you have too. Stated more broadly, all financial institutions that use that network have enabled Non-Visa Debit Transaction processing and thus need to comply with the Visa rule.

For example, let’s say your network offers a PIN-less bill payment product. A merchant that uses the same network offers that payment option in its online payment environment. One of your cardholders goes to that merchant’s web site and chooses that payment option because she sees the payment option has the same logo as she has on her card. Your institution has to honor that PIN-less bill pay transaction because you agreed to do so when you subscribed to your network. As a result, your institution has enabled Non-Visa Debit Transaction processing.

We are aware of the following networks that offer a PIN-less payment option:  STAR, PULSE, NYCE, COOP, and ACCEL/Exchange."  (emphasis added).

If one of your networks allows "Non-Visa Debit Transactions" the credit union must make certain disclosures to its cardholders as well as notifying VISA because these "Non-Visa Debit Transactions" would not be conducted through VISA's network and, therefore, would not receive VISA's zero liability and other protections. 

Take a look at your language in your cardholder agreement and Reg E disclosure to see if it addresses transactions not conducted through the VISA network.  If not, you may need to add this information as well as disclosing this information to your cardholders on an annual basis. 


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