ACH Overdraft Protection Setup
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Overdrafts occur when members do not have enough money in their share draft accounts to cover the amount of the debit items. Overdraft protection is an important and valuable service credit unions can offer to their members because it lessens the number of nonsufficient funds (NSF) processed.
Overdraft protection lessens the number of debit items that reject. Credit unions must be set up for share draft overdraft processing before they can use ACH overdraft processing. The system processes overdraft protection for ACH debits exactly like it processes overdraft protection for share drafts.
Normally the system would reject a draft if a member did not have enough money in their share account to cover it. The following table shows the two ways available funds are transferred from the member's share accounts to the share account with insufficient funds:
- Share withdrawal from specified share type
- Loan advance on a predesignated open-end loan
You can charge fees and create notices with ACH overdraft protection using the ACH Overdraft Notice Report 175. The 175 Report generates snap-out ACH overdraft notices, which Portico mails directly to members with a copy to your credit union. Portico combines all individual ACH debit transactions requiring overdraft protection to determine the transfer amount. Therefore, Portico creates only one overdraft fee and one notice per member per night. A member can receive an ACH overdraft fee and notice with a share draft fee and notice in the same night. Portico does not charge a fee if the ACH overdraft occurred against a loan.
ACH overdraft transfers are made in credit union-defined increments or a minimum amount according to the amounts specified on the Credit Union Profile – Loans tab for loans and the Share Profiles window for shares and share drafts. The options on the Credit Union Profile - Shares tab determine if the amount used is treated as an increment or a minimum.
ACH overdraft protection looks at each transaction separately to determine the total amount to overdraft. If multiple items are presented on the same night, the program reviews the amount needed to process each item separately to determine the total amount needed for overdraft. Then, the overdraft amount is transferred as a total amount.
You can set up ACH Overdraft Protection using the following fields in the ACH Overdraft section on the Credit Union Profile – ACH/Payroll tab. Users with the Portico - System (Profiles) - Credit Union (ACH/Payroll) - Maintain permission can update these fields.
| Field/Check Box | Description |
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Fee Amount |
The overdraft fee amount. |
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Fee GL Account |
The GL account that is credited for the overdraft fee. |
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Charge Per Item |
Select the checkbox to charge a fee for each item paid with overdraft funds up to a credit union-defined maximum fee amount. |
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Max O/D Fee |
The maximum fee amount that can be assessed to a share type per day. Valid values are 0.00 to 999.99. |
If the Fee Collection Method field is M or Z on the Credit Union Profile - ACH/Payroll tab, a fee is NOT assessed if there are not enough funds to cover the full fee amount.
To set up notices for the 175 Report, you must set the O/D Notice field to Y on the 170 Report Rules.
In addition, the options for ACH overdraft protection are determined by the specifications on the Shares - Draft Info tab. If the member does not have the available funds to process an ACH debit transaction, the system refers to the specified option in the Protection Option field on the member's corresponding Shares - Draft Info tab and processes the ACH overdraft accordingly. The following values can be specified in the Protection Option field.
S - Transfer funds from shares account
L - Transfer funds from loan account
X - Transfer first from loan, and then share
Y - Transfer first from share, and then loan
Blank - No overdraft protection
If a member has multiple share draft accounts, the system uses the overdraft information from the first Shares - Draft Info tab.
The statement messages available for ACH overdraft protection activity are:
- S/OVR DFT WTHDL and S/OVR DFT DEPST for share to share account activity
- OVERDRAFT LOAN and OVERDRAFT DEP for loan to share account activity.
To create a credit union-defined message for your ACH overdraft notices, access the Notice Messages window and select message ID OAC. On the ACH Overdraft Protection window, enter up to a 60-character message. Then, select Save.
You must select the Overdraft Account checkbox on the ACH Processing Options window.