DPS Payment Account Solutions

With each card program, your institution serves as both the Issuer and Merchant when settling funds. Your role depends on the type of transactions performed.

These types of transaction activity are part of your card program settlement:

• Card purchases
• Card transactions
• Card program fees
• Adjustments posted to cards
• Adjustments submitted for funding transactions

As the issuer of cards, your institution’s settlement routes through Visa. Transactions that are settled with your institution as the issuer are transactions that directly affect cards. 

Transaction Types

The settlement process for card transactions is the same as settlement for your Visa Check Card transaction activity. It consists of a funds transfer between your institution and Visa. Settlement for your institution as the Issuer includes card transaction activity, interchange fees, chargebacks, and merchant adjustments posted to the card.

Card Transaction Activity includes:

• Accumulating transaction totals
• Accumulating interchange fees assessed by networks
• Accumulating exception processing activity (chargebacks and adjustments)
• Calculating the net settlement amount for the day

Visa is responsible for this settlement, and provides a separate wire for your Visa card products.

Dispute Adjustments: Visa settles any dispute adjustments made to cards for your card program.

Card Program Fees: As an issuer, your institution moves funds associated with fees charged to cards as well as any posted miscellaneous adjustments. Your institution is also responsible for transferring funds from your card program’s Centralized Funds Pool to a revenue account.

Visa settles Issuer activity daily with your institution. Visa daily settlement includes all transactions and dispute resolutions completed in a 24-hour period, starting at 8:00 a.m. MT one day and ending at 8:00 a.m. MT the following day. The settlement position is a total of all your institution’s net debits and credits.

Each banking business day, Visa initiates a wire transfer to satisfy your daily net settlement obligation. Visa includes activity for Friday, 8:00 a.m. MT through Monday, 8:00 a.m. MT in Monday’s settlement. Visa always includes banking holidays on the next banking business day’s wire transfer.

If Visa processes more than one card program for your institution, transaction activity for all programs is included in the single daily settlement and Wire Confirmation Report. Although your institution does not receive a separate Wire Confirmation Report and wire transfer for each program, reporting for each program is separate, and individual totals roll up into one net settlement total.

Your institution serves the role of a Merchant for the sale of cards, funding account fees, and funding account adjustments.

There are a variety of different settlement processes used to support card purchases.

These processes include:

• Visa on-us purchases
• Merchant acquirer debit/credit purchases
• Issuer-Initiated Cash/check card purchases
• ACH (Automatic Clearing House) deposits

Visa on-us load transactions occur when consumer purchases are routed directly to your host processor for authorization, by-passing network involvement.

Transaction types that may be included in this settlement type include:

• Visa Debit/Credit card issued by your institution and processed by Visa
• Checking account transfer
• Savings account transfer
• Credit account transfer

Visa settles these transactions with your institution as part of the normal daily transaction settlement process. Offset debit and credit funds movement is provided between your card program wire and your Visa standard wire process. Offset debit and credit funds movement is provided between your card program wire and your Visa standard wire.

Merchant acquirer debit and credit card transactions occur when cards are purchased with a debit or credit card that does not qualify for Visa on-us routing. Instead, card purchase transactions route through the Visa or MasterCard network for authorization.

Transaction types that may be included in this settlement type include:

• Visa Debit/Credit
• MasterCard Debit/Credit

For this type of purchase, the Merchant Acquirer is responsible for settling funds with your institution. Visa submits authorizations to Visa for routing to the appropriate Visa or MasterCard Issuer and a daily file of approved transactions to the Merchant Acquirer for funds movement.

In your role as the Merchant, you must manage these items on a daily basis:

• Total dollar amount credited to or debited from Visa Prepaid cards as a result of a load or merchant adjustment transaction. This amount should be credited to or debited from your Centralized Funds Pool.
• Total dollar amount settled with your institution through your merchant account.

Total dollar amount of settled transaction fees charged by the Merchant Acquirer.

Funding transactions are settled within one to three days after the authorization is performed and posted to the card accounts.

Issuer-initiated or off platform purchases are a kind of card purchase that occurs at a branch location or virtual location. When payment is made using cash or check, such payments process outside of the Visa settlement flow. Other forms of payment can be used as well. All payments received via these methods are reported by the system.

Your institution is responsible for settling instant issue cards purchased at your institution or affiliated merchant and crediting your card program’s Centralized Funds Pool.

ACH deposits are the primary mechanism used for adding funds to a some types of card accounts. A batch interface between Visa, the issuer, and the Federal Reserve’s ACH Network is used to support ACH deposits to cards. The interface will also is also used to accept file transmissions from the ACH Network and to submit reject and return files to the ACH  Network. Regardless of whether an ACH transaction is a credit or a debit, the data flow of the transaction always remains the same. The originator always creates the entry and sends the request for the credit or the debit to the receiver’s account. Though the product reports all such transactions, responsibility for the transfer of funds remains between the Issuer and the ACH Network.

ACH credits can be delivered up to two banking days prior to the settlement date. The Receiving Depository Financial Institution (RDFI) must be able to take these entries as received and warehouse them until the funds are made available.

Settlement is the actual transfer of the value of funds between financial institutions to complete the payment instruction of an ACH entry. The Federal Reserve provides settlement services for ACH entries processed by the Federal Reserve and for private sector ACH Operators that process ACH entries. The Federal Reserve ACH Operator calculates the net credit and debit positions of financial Institutions and applies those credits or debits to the reserve accounts of the financial institutions that are maintained on the books of the Federal Reserve.