FCUs Can't Sell 3rd-Party Relationships For VISA

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A federal credit union may not act as a sales agent for VISA cards in exchange for a commission from VISA, NCUA said in a new legal opinion letter issued last week.

Such activity, said the federal regulator to VISA Debit Processing Service, runs counter to the Federal CU Act and its Incidental Powers provision.

VISA provides incentives, such as bonuses and per-transaction fees for financial institution clients that enlist local merchants in the card association's program and wanted to know if credit unions could participate in the arrangement.

The Incidental Powers rule does not cover this arrangement because it would predominantly benefit VISA, NCUA said in the legal opinion.

"An FCU may only engage in activities that the FCU Act expressly authorizes or that fall within an FCU's incidental powers," said NCUA. "The FCU Act does not authorize an FCU to solicit businesses to accept debit or credit cards in exchange for compensation from the card processor."

While the FCU Act allows a credit union to act as a "finder" by bringing third-party vendors together with the credit union's members, the finder authority does not extend to the marketing and promotion of a third-party's products or services to non-members, NCUA said.

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