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Last update: 10/22/14

Prepaid Cards

Prepaid debit cards work like traditional debit/credit cards and access funds pre-paid for the cardholder that have been loaded by another consumer (as a gift), by the government for benefits, and by employers for payroll, rewards/incentives or health benefits.

While overall growth of prepaid cards is surging, largely due to the emergence of non-bank competition, community banks have yet to offer prepaid cards on a large scale. About half (48 percent) of community banks offer some sort of prepaid product, and those banks offer gift (43 percent), travel(24 percent), general-purpose reloadable(12 percent), and payroll cards (2 percent). However, ICBA anticipates an uptick in community bank participation given the substantial growth of the GPR card segment as part of the overall prepaid card market.

Positions

  • ICBA encourages policymakers to take into account the unique attributes of prepaid card products and recognize the need to foster innovation to deliver the best possible products to meet consumers’ needs.
  • ICBA strongly urges policymakers to adopt modified error resolution rules for prepaid cards that do not require a card issuer to provide cardholders with provisional credit while the institution investigates an alleged error.
  • ICBA urges policymakers to work with the financial services industry to develop innovative approaches to providing clear disclosures that let consumers easily compare services.
  • ICBA encourages policymakers to consider the short- and long-term impact of mobile devices on prepaid cards. Increasingly, prepaid card products are now accessible via mobile phones and smart phones, and such expansion is expected to continue over the long term. Any regulation should avoid tying the disclosure to the physical card.

Staff Contacts: Cary Whaley



Date Title Source/Publication
08/01/2006 Regulation E Final Rule on Payroll Cards The Federal Reserve
Visa Paycard Portal American Payroll Association

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