Can a bank charge non-customers transaction fees when cashing an economic impact payment (EIP) Visa prepaid card or an EIP check?

We do not believe that the Visa rules permit you to charge fees for manually cashing an EIP debit card, although you may be able to charge certain ATM fees if the card is cashed at an out-of-network ATM. As for cashing an EIP check, we believe that the same rules under the Uniform Commercial Code (UCC) would apply to charging fees for cashing EIP checks as would apply when cashing any noncustomer check.

Charging Fees to Noncustomers when Cashing EIP Visa Prepaid Cards

The publicly available Visa Core Rules and Visa Product and Service Rules prohibit charging fees for manual cash disbursement of funds from prepaid Visa cards. Additionally, the cardholder agreement for the EIP prepaid cards informs cardholders that they will not be charged fees when cashing the cards at an in-network ATM. However, the Visa rules do not prohibit charging a fee for withdrawing funds from Visa prepaid cards via ATM for shared deposit transactions made at out-of-network ATMs. We recommend reviewing any agreements you have with Visa to ensure that they correspond with the publicly available information referenced in the resources below.

Charging Fees to Noncustomers when Cashing EIP Checks

The Uniform Commercial Code (UCC) could impose liability on your bank should you refuse to cash a properly payable check (such as an EIP check) due to nonpayment of a check cashing fee. However, only the issuer of the check would have standing to sue your bank for wrongful dishonor — while a noncustomer presenting the check for cashing would not have standing. Consequently, dishonoring an EIP check presented by a noncustomer who does not pay a check cashing fee would carry a low risk of liability under the UCC.

Additionally, we note that several large and regional banks signed onto a pledge with the Illinois Department of Financial and Professional Regulation (IDFPR) to cash EIP checks for noncustomers without charging fees (generally on a case-by-case basis and requiring proper documentation). Your bank may wish to direct noncustomers seeking to cash an EIP check to those institutions.

For resources related to our guidance, please see:

Visa Core Rules and Visa Product and Service Rules, Section 5.8.1.1 — Manual Cash Disbursement Requirements (October 17, 2020) (“If a Member makes Manual Cash Disbursements to other Issuers’ Cardholders, it must do so in a uniform manner for all Visa products properly presented. In the Canada Region, US Region: A Member authorized to make Cash Disbursements must make Manual Cash Disbursements to Cardholders of other Issuers’ Prepaid Cards at all of its Branches.”)

Visa Core Rules and Visa Product and Service Rules, Section 5.8.1.3 — Manual Cash Disbursement – Acquirer Access Fee (October 17, 2020) (“If an Acquirer assesses an Access Fee on a Manual Cash Disbursement, it must do all of the following: . . . In the Canada Region and US Region: Not assess an Access Fee on a Manual Cash Disbursement conducted with a domestic Prepaid Card.”)

Visa Core Rules and Visa Product and Service Rules, Section 6.4.1.1 — Domestic ATM Access Fees (October 17, 2020) (“An ATM Acquirer must not impose an Access Fee on a domestic ATM Transaction unless either:

The Transaction is a Shared Deposit Transaction

Applicable laws or regulations expressly require that an ATM Acquirer be permitted to impose an Access Fee.”)

Money Network, Economic Impact Payment Cardholder Agreement (March 17, 2021) (“1. Features, Fees and Limits . . . .
No Cost Services and Transactions: . . . Domestic ATM Withdrawals | Using In-Network ATMs Nationwide that carry the AllPoint® or MoneyPass® brand. . . .

Fee-based Services and Transactions: A fee will be deducted from your Card account balance for certain services and transactions including: ATM Withdrawals | Out-of-Network | Domestic $2.00 (we waive this fee for your first ATM Withdrawal). . . .

The above fees do not include any fee that may be separately charged by an owner or operator of an ATM, POS terminal and/or any network used in connection with the transaction, including any surcharge imposed by an Out-of-Network ATM, Retail Load Partner, or Check Deposit partner (and you may be charged a fee for a balance inquiry even if you do not complete a fund transfer). The amount of any additional fee is established by the third party and disclosed at the ATM, POS, or via the Money Network Mobile App. Your consent to the charge must be obtained before the transaction is completed.”)
Johnson v. First Banks, Inc., 889 N.E.2d 233, 235 (5th Dist. 2008) (“Pursuant to the plain language of the [Uniform Commercial] Code, the plaintiff, who does not have an account with the defendant, is not a ‘customer’ and therefore lacks standing to pursue a cause of action against the defendant for a wrongful dishonor.”)
Kronemeyer v. U.S. Bank Nat. Ass’n, 857 N.E.2d 686, 689 (5th Dist. 2006) (“Section 4-402(b) confers no cause of action on the holder of an allegedly dishonored item. Accordingly, the plaintiffs have no standing to pursue a cause of action against U.S. Bank for a wrongful dishonor. the plaintiffs have no standing to pursue a cause of action against U.S. Bank for a wrongful dishonor.”)

Illinois UCC, 810 ILCS 5/4-402(b) (“A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item.”)

IDFPR Press Release, IDFPR and Banks Work Together Again to Provide Free Check Cashing for Stimulus Checks (January 7, 2020) [The 2020 date noted in the press release is a typo] (“IDFPR is proud to announce a number of banking institutions that are able to work with non-customers on cashing their stimulus checks for free. Thanks to Bank of America, First Midwest, Fifth Third, Huntington, Wells Fargo, JP Morgan Chase and U.S. Bank, Illinoisans will be able to cash their stimulus checks without incurring fees in order to ensure these funds go toward the food, housing, and necessities that people need during this difficult time.”)