A NAFCU representative told a hearing of the House Financial Services Committee that limiting overdraft fees to one a month per account would not be workable since credit unions and their members are not the only parties to an overdraft.
Mark Colley, CEO of the Tulsa Postal & Community Federal Credit Union, prepared testimony for the committee stating that credit unions have to post payments to merchants for goods and services members purchased with their debit cards and often these purchases are not made in "real time."
"Since the transaction is authorized by the merchant at the time it takes place, the credit union is contractually obligated to post the payment, even though the funds are not available in the consumer's account to cover it," Colley explained in the prepared remarks. "Many credit unions complain that merchants are not checking accounts in "real time" to ensure a transaction has cleared the account and does not create an overdraft. Merchants instead often process all transactions at the end of the day, when a consumer's multiple transactions may cause him or her to overdraft several times. As it stands, this provision appears impractical and impossible to comply with unless all merchants were required to process in real time."
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A proposed requirement for same day notification of overdrafts would face a similar difficulty, Colley explained. "Credit unions that batch their transactions may not learn that an overdraft has taken place until all transactions clear at the end of the day, including checks. It would also be impossible for a credit union to provide notification to a consumer the same day an account has been overdrawn, if merchants process all transactions at the end of the day," he wrote.
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