Small Business Accounts - ATM &Check Cards

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Question:

We have recently started offering ATM and Check cards to our consumer customers. Some of our small business account customers are now requesting an ATM and Check card. These customers are classified as business accounts on our system. Can we issue these business accounts the same card we are giving to our consumer accounts and if so, does Reg E apply to the business accounts with this card?

Answer:

If you're thinking about issuing debit cards to small businesses, get your hands on a copy of the MasterCard or Visa (as appropriate) rules governing the issuance of such cards. The card associations have certain requirements, and you may not be be able to issue the same card that you issue to consumers.

If you issue ATM or debit cards to small businesses, Regulation E does not apply, but you should make sure you aren't agreeing in your account or card agreements to give your business customers the same protections. You should work with counsel to develop a separate cardholder agreement that sets out the rights and responsibilities that you wish to apply to your business card accounts. I also suggest that your agreement specifically disclaim the application of Regulation E, the Electronic Fund Transfer Act, and any comparable state consumer protection law to transactions completed with the business cards.

First published on BankersOnline.com 9/17/07